Ford (F) Gains on Double Boost From Analysts

April 22, 2021 8:21 AM EDT
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Price: $11.58 -1.11%

Rating Summary:
    11 Buy, 15 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 26 | Down: 19 | New: 41
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Shares of Ford (NYSE: F) are trading about 2.5% higher in pre-open Thursday after the stock received a boost from two stock market analysts.

Wolfe Research analyst Rod Lache upgraded to “Outperform” as he believes the company could get a re-rating soon, similar to the one experienced by General Motors (GM) in the fall of 2020.

Analysts are provided with “clear reasons to gain confidence in the company’s terminal value, and growth,” Lache writes in a note sent to clients.

“We believe that our views are out of consensus, as we continue to hear from investors that Ford is “way behind” in the technologies that will matter, catalysts that can change perception. Ford is finally entering a compelling new product cadence after multiple years of relative weakness. While the product cycle thesis is widely anticipated, we suspect that the outcome will still surprise,” the analyst adds.

Lache sees a “very clear path for further improvement in 2022 and beyond,” as the company transforms its global approach. The analyst hiked the price target to $15.00 per share from $13.00.

“Ford will largely exit manufacturing in South America by the end of this year ($500 MM loss in 2020). We also expect Ford to largely eliminate losses in Europe ($800 MM loss in 2020). And we expect significant improvement in China (lost $500 MM in 2020). Warranty is also starting to turn around, after subtracting $2 bn from Ford’s annual profitability.”

“We expect Ford to lay out a plan to achieve competitive costs for EVs. And we also believe that Ford is positioned to set new benchmarks (amongst legacy OEMs) in vehicle architectures and internal software competency. These attributes will become increasingly critical as vehicles become platforms for delivering new features and services,” the analyst notes, before adding that external catalysts, such as upward valuation marks for Argo (a 40% stake) and Rivian (about 10% owned by Ford) could also propel the carmaker’s valuation.

The second boost for Ford stock price came from Deutsche Bank analyst Emmanuel Rosner, who added Ford to a “Catalyst Call Buy List.”

Rosner argues that the Buy-rated Ford has “favorable vehicle mix/pricing, combined with a robust product cycle, improved warranty performance, and restructuring savings could result in a large 1Q21 earnings beat.”

“The strength of Q1 could potentially enable management to maintain its FY21 earnings guidance despite intensifying headwinds from chip shortages, but even if Ford does have to lower its full-year guidance due to production disruptions in Q2, we would use any weakness in the stock post earnings as an opportunity to add to positions ahead of the company's investor day, expected later this spring,” the analyst added in a memo.

He concludes by saying that investor enthusiasm could increase heading into Ford’s investor day later this spring, where he expects the company to “reboot its global restructuring program, provide an updated plan to reach its 8% margin target, and present a redesigned EV strategy.

Deutsche Bank raised the price target on Ford to $13 from the prior $12.

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