TOKYO (Reuters) -- Nikko Citigroup lowered its investment rating on Japan's top three automakers -- Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. -- on Friday while raising its rating on fifth-ranked Mazda Motor Corp.

Nikko Citigroup kept its target share prices for Toyota and Nissan at 3,700 yen and 1,050 yen respectively, saying it was not revising the companies' earnings estimates. It raised Honda's to 4,500 yen from 3,600 yen.

The investment bank said shares in Toyota were likely to enter an adjustment phase after Japan's biggest automaker releases its first-quarter earnings on August 5. Nikko Citigroup expects a double-digit fall in profit due to the dollar's fall.

Toyota's rating was lowered to 2H (in-line, high risk) from 1H (outperform, high risk).

Nikko Citigroup lowered Nissan's rating to 3S (underperform, speculative) from 2S (in-line, speculative), saying it was time to take profits on the stock's recent rise beyond its target price.

Last month, Nissan's shares went above 1,100 yen for the first time in 13 years and they hit a high of 1,287 yen on Tuesday.

Nikko lowered Honda's rating to 3H (underperform, high risk) from 2H (in-line, high risk) after its shares gained about 43 percent from its 3,630 yen close on April 25, when it announced full-year results.

But it raised its target price, saying an improved market environment had alleviated investors' concerns over the yen's strength and Honda's sales slide in Japan.

On the other hand, Nikko Citigroup raised its rating and target price for Mazda, citing the reduction of inventory in the United States and hopes that the new RX-8 sports car would help boost sales in that market.

Its new rating is 1S (outperform, speculative), against a previous 2S (in-line, speculative), while its target price rose to 350 yen from 250 yen.

"We understand earnings are improving steadily," Nikko Citigroup wrote in a note to clients.

"Mazda's earnings are more exposed to yen-euro rates than yen-dollar rates, and we think the negative impact of the dollar weakness is being offset by the benefits of euro strength."

It said Mazda's sales in Europe were growing steadily, although there were risks from its domestic and U.S. sales trends.

Among other auto stocks, the investment bank raised its rating on minicar maker Daihatsu Motor Co. and Subaru-maker Fuji Heavy Industries Ltd., both to 2S from 3S.