MZDAF - Mazda Motor is tipped by Nomura to rally +40%

Looking for an automobile stock that might be a bit of a sleeper? Nomura turned bullish on Mazda Motor Corporation ( OTCPK:MZDAY ) on Friday after being impressed by the Japanese automaker's U.S. sales performance and improved brand appeal.

Analyst Masataka Kunugimoto noted that increased orders for CX-60 in Japan and Europe make it increasingly likely that Mazda's ( OTCPK:MZDAY ) strategy of making upmarket vehicles in Japan and selling them in the West will pay off.

Mazda is also noted to be the only major global automaker to have focused on upmarket rear-wheel drive SUVs.

"The CX-60 racked up orders of 14,000 vehicles in Japan and 19,000 vehicles in Europe in its first few months on sale, mainly for upmarket models, and this has raised the likelihood that the CX-60, together with the CX-90, CX-70, and CX-80, which are scheduled for release in due course, will be able to generate annual global sales of 150,000-200,000 vehicles in total."

Since those key models are made in Japan, yen depreciation is said to be very likely to boost earnings for Mazda ( OTCPK:MZDAY ).

As for the risk in the U.S. of not complying with the Inflation Reduction Act requirements for EV tax credits, Nomura thinks Mazda ( OTCPK:MZDAY ) will look for optimal solutions to this, including collaborations with partners such as Toyota Motor ( TM ).

Nomura upgraded Mazda ( OTCPK:MZDAY ) to a Buy rating from Neutral and set a yen-denominated price target that implies 40% upside potential.

See the 52-week trading chart on Mazda.

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