Morgan Stanley has flagged the possibility of further downside for Honda Motor's stock, pointing to the automaker's recent disclosure of substantial electric-vehicle related losses and a more cautious outlook from management. The investment bank places a 70% to 80% probability on Honda shares falling versus the country index over the next 15 days.
Honda revealed additional EV-related losses of up to a52.5 trillion, with the company estimating roughly a51.7 trillion of that amount would be cash outflow. Morgan Stanley described this sum as larger than anticipated and said it will likely weigh on the share price in the near term.
Despite the negative assessment of the EV losses, Honda said it will hold its fiscal 2026 dividend at a570 per share and expressed the intention to keep the dividend at that same level for fiscal 2027. Morgan Stanley commented that the dividend yield should offer some downside support for the stock, even as the broader tone remains bearish.
The bank attributed its negative stance primarily to the automaker e2 80 99s lowered forecasts and guidance. In Morgan Stanley e2 80 99s view, the updated guidance and the scale of the EV losses are central drivers behind the expectation that Honda will underperform relative to the country index in the short window the bank identified.
For investors and market participants focused on the intersection of technology and automotive product strategy, the disclosure underscores the cost of scaling EV initiatives when outcomes deviate from prior expectations. At the same time, Honda e2 80 99s decision to preserve the dividend signals management e2 80 99s intent to maintain shareholder income even as it adjusts guidance around its EV program.
Key points
- Morgan Stanley assigns a 70% to 80% probability that Honda shares will fall versus the country index over the next 15 days.
- Honda disclosed up to a52.5 trillion in additional EV-related losses, including about a51.7 trillion of cash outflow.
- Honda will keep its fiscal 2026 dividend at a570 per share and aims to maintain the same level for fiscal 2027; Morgan Stanley says this yield should provide some downside support.
Risks and uncertainties
- The magnitude of EV-related losses could continue to pressure Honda's share price in the near term, affecting investors in the automotive sector.
- Morgan Stanley's expectation of short-term underperformance carries uncertainty over the 15-day horizon and is contingent on market reaction to the company's guidance.
- The degree to which the dividend yield offsets downward pressure is uncertain and could influence investor behaviour in equity and income-sensitive segments of the market.
Investors should note that the bank's view centers on the company's own updated forecasts and the disclosed scale of EV losses. These elements are the explicit reasons cited by Morgan Stanley for the near-term bearish outlook.