On Thursday, Mitsubishi Motors Corp. experienced a change in its stock rating as Morgan Stanley revised its stance from Overweight to Equalweight, adjusting the price target from JPY500.00 to JPY370.00.
This adjustment reflects the increased competition that Mitsubishi faces in the ASEAN market, particularly from Chinese Original Equipment Manufacturers (OEMs). Morgan Stanley’s earlier Overweight rating was driven by expectations of new model launches in the ASEAN region, as well as potential positive outcomes from collaborations with Honda and Nissan.
While the firm still supports these factors, the recent downgrade to Equalweight considers the risks introduced by the growing presence of Chinese competitors. These competitors are viewed as a considerable threat to Mitsubishi’s sales volume in the region, especially affecting models such as the MPV Xpander, and the smaller Mirage and Attrage.
The revised price target is based on a Price-to-Earnings (P/E) ratio of 4 times, down from the previous 5 times, incorporating a discount to account for the competitive risks in the ASEAN market. This valuation is derived from the firm’s Fiscal Year 3/26 Earnings Per Share (EPS) estimate.
Despite the downgrade, Mitsubishi Motors avoids an Underweight rating owing to the anticipated details regarding its partnerships with Honda and Nissan. Morgan Stanley expects that more clarity on these collaborations could lead to announcements of improved shareholder returns.
Additionally, the firm notes that Mitsubishi Motors’ shares currently appear undervalued, suggesting potential for future reassessment.
This article was generated with the support of AI and reviewed by an editor.
