Don't Sell Toyota Shares, Says Analyst

TOKYO ( TheStreet) -- Thinking of selling Toyota ( TM) shares due to earthquake fallout?

Think again, says Standard & Poor's analyst Efraim Levy.

In a report issued Monday morning, Levy rates Toyota a hold, noting "we think Toyota is well-positioned to weather the earthquake's impact."

It is true that every Japanese automaker has halted domestic production, with the shutdowns generally extended at least through Wednesday. Issues include lack of parts, power shortages, damage to export ports and employee concerns.

The shutdowns could last longer, Levy said. Prius supplies may be restricted, even as Prius demand rises due to higher gas prices. Moreover, Japanese automotive spending could slow -- although judging from some of the scenes we saw on TV, plenty of demand exists for replacement vehicles.

In any case, Levy said he is willing to look beyond these short-term harmful impacts and to bet on Toyota's recovery.

In this respect, Levy resembles Jim Cramer, who says that it is a mistake to assume that the earthquake in Japan must lead inexorably to economic slowdown.

"Historically rebuildings, whether they involve the Katrina hurricane aftermath or in post-Katrina or the storms in Australia or the terrible hurricane in Southern Florida not that long ago, spur a large amount of economic growth," Cramer told Real Money subscribers on Monday morning. "They unleash reserves from insurance companies that is new money. They force governments to make emergency loans as fast as possible. They lead to tremendous economic activity."

Shortly before midday Monday, shares of Toyota were trading at $80.94, down $4.71 or 5.5%. Shares of Honda ( HMC) were trading at $37.90, down $1.84 or 4.6%.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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