Ratings Firm Reverses "Buy" Opinion, Downgrades Toyota

Apparently having second thoughts, Standard & Poor's Equity Research today reversed a report it issued earlier this week and downgraded Toyota (TM) to "Hold" from "Buy."

Toyota is getting hammered by bad news on all sides, because of its gas-pedal recall. In just the last couple of days, the news on Toyota has gone from bad to worse.

"While we believe TM has strengths, including a strong balance sheet, with expanding challenges to its core quality reputation, we lower our opinion to hold from buy," said Efraim Levy, the New York-based S&P analyst for auto manufacturers and parts suppliers. Levy just said on Feb. 1 that S&P would stick with its "Buy" opinion. However, Levy said today that with a quarterly earnings release due from Toyota tomorrow, "we now recommend a cautious approach."

He cited Toyota's "tarnished image," and said S&P expects to hear details from Toyota tomorrow about the costs associated with the recall.

Photo: Newcastle Toyota (Australia)