Goldman Sachs Views Ford (F) Guidance as Conservative; Analyst Comments on Implications for GM (GM)

Goldman Sachs maintained a Buy rating on Ford (NYSE: F) with a price target of $21. Yesterday Ford gave disappointing guidance during its investor day. In the view of analyst Patrick Archambault, guidance seems conservative. He also said issues are Ford specific.

"For 2014, we were surprised by the extent of the one-time charges in NA. The guidance implies a rapid deterioration of the environment in Latin America and Russia. However the 2015 guidance seems quite conservative to us particularly with respect to NA, which we think should see a bigger yoy improvement in 2015 given: 1) the non-recurrence of $1bn in warranty charges, 2) a slowing launch cadence of new vehicles, and 3) our view that management may be factoring in modest F-150 price increases into its forecasting to start with, and given capacity constraints we think they will see further increases in short order," said Archambault.

Commenting on implications for General Motors (NYSE: GM), Archambault said, "In our view the disappointments were North America and Europe, and to a lesser extent South America. For NA, we think this is very Ford specific. GM has already worked its way through the vast majority of its recalls, and has also moved beyond the peak launch costs of its truck program (which Ford has yet to do). For Europe, Ford’s weak outlook has more of a read across. Ford has more Europe exposure at 21% of sales (GM has 14%) and both have very small Eastern Europe/Russia exposure at around 4%, which are causing disproportionate headwinds. For Latam we expect losses in 2H for GM as well, but note GM has added back Venezuela devaluation impacts as one-time, which will likely keep the full year loss number this year below Ford’s."

For an analyst ratings summary and ratings history on Ford click here. For more ratings news on Ford click here.

Shares of Ford closed at $15.11 yesterday.

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