Honda Finishes Fiscal 2022 on Solid Ground but Raw Materials Costs Key Variable for Fiscal 2023

Honda reported fiscal 2022 fourth-quarter results that like the rest of the industry showed headwinds from rising materials cost but EPS of JPY 73.02 still beat the Refinitiv consensus of JPY 59.00. The yen has weakened against the dollar by about 14% since our last model update which creates favorable profit forecasts all else constant, but also causes a significant currency translation headwind for our U.S. dollar fair value estimate because our model is in yen. We are lowering our dollar fair value estimate for the dollar shares by 5.7% to $33 but we are raising our Tokyo exchange share fair value estimate by 7.5% to JPY 4,300.