(Bloomberg) — Toyota Motor Corp. shares climbed and were headed for their biggest two-day advance since August on expectations of a higher return-on-equity following a report the Japanese automaker is planning to double its target.
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The stock gained 5.4% at the end of the morning trading session in Tokyo, poised for a 10%, two-day gain. Shares gained on Wednesday after the Nikkei newspaper reported the company plans to increase its ROE to 20%, citing an unidentified executive. A spokesperson said that Toyota “doesn’t have an explicit target or deadline” for ROE.
If the report is accurate, “the company would need to boost earnings from the value chain, in order to further propel profit margins upward,” Morgan Stanley MUFG Securities Co. analyst Shinji Kakiuchi wrote in a report. “We’ll also be watching for Toyota, as a part of moves to improve capital efficiency, to take funds from selling its equity holdings to bolster shareholder returns further.”
Toyota shares have jumped over 20% this year, outperforming the broader Topix index, as a weaker yen helped boost income in its home currency. Still, the latest announcement by the world’s biggest automaker showed global sales plateaued in November as lackluster demand coalesced with a pause in production at two plants.
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