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Honda falls as Takata recall dents earnings

Airbag deploy test
Caspar Benson | Getty Images

Honda Motor shares fell almost 5 percent Friday after the automaker posted a surprise fourth-quarter loss of $860 million driven by costs related to recalls of Takata Corp.-made air bags.

Honda said it would recall 21 million more vehicles, on top of the 30 million already recalled, to replace defective air bags made by Japan's Takata Corp.

Takata's air bag inflators can explode with too much force, spewing shrapnel inside the vehicle. These malfunctioning air bags are responsible for at least 11 deaths worldwide. Honda is Takata's biggest customer.

Takaki Nakanishi, head of Japanese automobiles research at Jefferies sees the light at the end of the tunnel for Honda's Takata recall woes. "We think the final conclusion by the NHTSA and Japan's MLIT, in light of investigative results....is approaching." Nakanishi said in a note.

Despite Honda's quarterly miss, global vehicle sales rose almost 9 percent, thanks mostly to a 10 percent rise in the company's biggest market, North America.

Nakanishi sees opportunity in Honda stock. The veteran auto analyst says Honda is a top pick, just after Toyota and Nissan. "We think at the current share price, Honda, which is trading at a discounted level, is very attractive." he said in a note.

Honda shares are off by about 18 percent year-to-date, and 24 percent over the past 12 months.