Morgan Stanley downgraded Hota Industrial (1536:TT) (OTC: HOTIF) from Equalweight to Underweight, significantly reducing the price target to NT$40.00 from the previous NT$61.00. The adjustment follows a notable decline in Hota's share price after the company lost market share to Chinese competitors supplying Tesla (NASDAQ:TSLA)'s Shanghai plant.
The firm indicated that despite Hota Industrial securing other electric vehicle (EV) projects, the financial impact of these new ventures is currently minimal and will require time to develop. This situation suggests that investors might adopt a cautious stance, waiting for clearer evidence of operational improvement before committing further.
Morgan Stanley noted that Hota's valuation, which stands at 33 times the 2025 estimated forward price-to-earnings, appears high considering the company's shaky fundamentals. This is despite potential opportunities in the robotics sector and ongoing discussions between Main Drive Technology, a Hota investment, and Tesla, which have not yet yielded tangible results.
The report from Morgan Stanley anticipates that additional earnings revisions could lead to further pressure on Hota Industrial's stock performance. The downgrade reflects concerns over the company's ability to meet market expectations and the impact of competitive challenges on its financial outlook.
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