UPDATE: Jefferies Initiates On Toyota Motor On Mediocre CAGR, Overblown Expectations Of Higher Dividends

In a report published Thursday, Jefferies analyst Takaki Nakanishi initiated a Hold rating on

and initiated a price target of $135.75. In the report, Jefferies says "Key arguments in our Hold rating are as follows: (1) three-year operating profit CAGR of 4% in FY3/15–FY3/17 looks mediocre, well below the sector average of 7%; (2) Toyota is unlikely to lift its 30% benchmark payout ratio anytime soon, so expectations of higher dividends are overblown, creating the risk of disappointment; (3) we take the view that the company's business reform benefit would not be fully up and running until 2015 or beyond, creating mediocre medium-term product competitiveness, production capacity shortages hampering volume growth, and a cost-push stemming from soaring investments for the future." Toyota Motor closed on Wednesday at $126.05.