How Investors Are Reacting To Honda Motor (TSE:7267) Cutting Forecasts and Lowering EV Ambitions

• On November 7, 2025, Honda Motor Co., Ltd. revised its full-year earnings forecast for the fiscal year ending March 2026, projecting sales of ¥20.7 trillion and operating profit of ¥550 billion, after reporting a second-quarter operating profit decline of 25% year-on-year attributed to higher electric vehicle costs, weaker sales in Asia, and U.S. import tariffs.
• Alongside this profit warning, Honda also lowered its long-term electric vehicle sales target as it faced increasing competition and regulatory headwinds, signaling enduring challenges in its transition to next-generation mobility solutions.
• We will now explore how Honda's reduced profit outlook and revised EV ambitions reshape its investment narrative and long-term prospects.

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Honda Motor Investment Narrative Recap

To be a shareholder in Honda Motor today, you need to believe in the company's ability to successfully transition to electrification and defend its market position in Asia amid fierce competition. The recent downward revision to Honda's full-year earnings forecast highlights pressure from higher EV costs and weaker Asian sales, impacting the company's most important short-term catalyst, its pivot to profitable next-generation vehicles, while amplifying the risk of prolonged weakness from margin compression and tariff-related costs.

The latest corporate announcement of a slightly higher interim dividend (JPY 35.00 per share for the second quarter) despite the profit warning will be relevant for investors watching for signs of management confidence or commitment to capital returns, especially as earnings remain under pressure from trade headwinds and elevated EV transition expenses. In sharp contrast, investors should be aware of the persistent risk that Honda’s exposure to escalating global price competition and rapidly evolving regulatory demands may...

Read the full narrative on Honda Motor (it's free!)

Honda Motor's narrative projects ¥22,320.2 billion revenue and ¥855.5 billion earnings by 2028. This requires 1.1% yearly revenue growth and a ¥217.7 billion earnings increase from ¥637.8 billion today.

Uncover how Honda Motor's forecasts yield a ¥1744 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members submitted four fair value estimates for Honda, ranging from ¥218.55 to ¥1,744.38 per share. While some expect extreme undervaluation, new profit guidance and persistent competitive risks remind you that future outcomes for Honda’s earnings and valuation remain highly contested, so consider multiple viewpoints before forming an opinion.

Explore 4 other fair value estimates on Honda Motor - why the stock might be worth less than half the current price!

Build Your Own Honda Motor Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Honda Motor research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Honda Motor research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Honda Motor's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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