Nissan Motor Co. fell the most in 21 months in Tokyo trading after Nomura Holdings Inc. cut its stock recommendation, citing concerns the company may miss its profit target on higher costs and slower sales.
Nissan, Japan’s second largest automaker, fell 7.1 percent to 784 yen as of 11:27 a.m. on the Tokyo Stock Exchange, headed for its biggest decline since March 2011. The benchmark Nikkei 225 Stock Average dropped 1 percent.
“Earnings are increasingly likely to fall short of guidance in 13/3, despite recent depreciation in the yen, as sales volumes have lately fallen short of our expectations in Japan, the U.S., and Europe,” Masataka Kunugimoto, Tokyo-based auto analyst at Nomura, wrote in a report dated yesterday, referring to the financial year ending March. The brokerage lowered Nissan to neutral from buy and cut the target price to 810 from 880 yen.
Nissan, the top Japanese seller of vehicles in China, cut its full-year net income forecast 20 percent after consumer backlash stemming from a territorial dispute sent sales lower in its largest market.
Net income may total 320 billion yen ($3.8 billion) for the year ending March 31, compared with its earlier estimate of 400 billion yen, the Yokohama, Japan-based company said last month. The carmaker cut its operating income forecast to 575 billion yen from 700 billion yen, and lowered its global vehicle sales target by 5 percent to 5.08 million units.
Nissan’s main models such as the Altima and Note had weak sales in the U.S. and Japan respectively for the months of October and November, increasing concerns about earnings in the second half of the fiscal year, according to Kunugimoto. In Europe, sales in Russia started declining in October due to intensified competition, ending a period of growth until then.
“Incentives and other selling costs have been rising more than we anticipated in Japan and Europe,” he said in the report.