Jump on Toyota shares at this level? I'm not so sure (TM)

As Toyota shares have been creamed over the past weeks  - the American Depository Receipts have plunged 17% in less than three weeks - some analysts are suggesting a bottom is in and people should buy the stock.

While I agree with analysts saying that Toyota will recover from this disastrous string of recalls - getting even worse today  - I think the stock had gotten ahead of itself well before these problems.  Granted, I think Toyota is a fantastic brand with better than the industry average growth ahead of it, but at $75 and up, people are pricing it as if a return to 2005-2007 earnings levels are about to return.  I find that to be a sub-50% probability, as the ability to securitize auto loans will be permanently impaired from here on out, reducing the ability of people to finance cars that equate to 75% and up of their annual income...

Citigroup analyst Noriyuki Matsushima for one, has a $99.77 target for the ADRs.  But a look above at peak earnings shows that to be a PE multiple of nearly TWENTY, on earnings that will be very tough to get back to.  (The the exchange rate fluctuates, I used a 100-1 ratio for Yen to dollars).

I'm definitely not overly pessimistic on the shares, especially if they can get back to the $2.50 range on their dividend.  But I think the recall lead to a correcting that the shares needed anyway.

How 'bout this classic beauty of a Toyota?

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