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Honda shares are down 15% since the March 11 earthquake. Toyota, Nissan and Mitsubishi shares are down around 13%.Although factory shutdowns will diminish production for 2011, Goldman says the attractive fundamentals haven’t changed.
Analyst Peter Archambault says auto stocks have a 20% upside:
We believe investors will ultimately look through 2011 production shortfalls that are not demand-related. While we trim our 2011 estimates by an average 5%, 2012E rises by 3%, yielding price targets with an average upside of 20%. We view weakness in the shares as a buying opportunity as we believe we are still in the early stages of a global demand rebound, with valuations that are not fully reflecting sector EBITDA and FCF growth prospects. Our top ideas remain CL-Buy rated Ford and Dana.
Goldman likes Ford, which is actually up 5% since the quake and claimed America’s hottest selling car in February.