ADRs in Focus: Honda slips following hybrid news

Honda, Japan's second-largest auto maker, plans to sell a new gas-electric hybrid in 2009 and will expand in Japan to cut costs and stay competitive.

Citi Investment Research analyst Noriyuki Matsushima, who rates the stock "Buy," expects hybrid vehicles to help drive profits.

"We think it (Honda) could secure a higher level of earnings based on its strong environmental technologies," Matsushima wrote in a client note.

Goldman Sachs analyst Kota Yuzawa, who rates the stock "Neutral," said larger rival Toyota Motor Corp. will lead expansion in hybrid electric vehicles.

"We cannot yet imagine a scenario in which Honda, with its lower sales volume, would post higher hybrid utility sales profits than Toyota," Yuzawa wrote in a client note.

The Bank of New York Asia ADR Index, which tracks shares of companies based in China, India, Australia and elsewhere, declined 0.31 points, or 1.3 percent, to 164.51. ADR stands for American Depositary Receipt, which is a security designed to allow U.S. investors trade shares of companies based overseas.

Honda declined 20 cents to $32.29 in afternoon trading, and Toyota declined $1.49 to $101.72, following Wall Street lower as the price of oil set a fresh high.