Ford (F) Stock Extends Losses in Pre Market as Jefferies Downgrades to Hold, Analyst Says Stock is 'Missing a New Angle'

January 20, 2022 7:18 AM EST
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Price: $12.85 +0.55%

Rating Summary:
    11 Buy, 19 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 4 | Down: 15 | New: 7
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Shares of Ford Motor (NYSE: F) are down 2% in pre-open Thursday after closing nearly 8% lower yesterday following a strong run-up in shares into CY21 year-end.

Jefferies analyst Philippe Houchois downgraded to Hold from Buy and raised the price target to $25.00 per share from the prior $20.00. Houchois says Ford shares are “missing a new angle.”

“We think it is premature to re-rate legacy OEMs for their EV progress since earnings remain mostly driven by cyclical shortages, returns remain within historical norms and the EV transition is largely a zero-sum-game initially…Prefer Stellantis (Buy, €25/$29) on legacy catch- up. We continue to see Tesla (Buy, $1,400) as industry threat,” Houchois said in a client note.

The analyst remains positive on the fundamentals as he believes the company will be able to grow earnings this year both in the US and internationally.

“We think product contribution, volume and efficiency can offset an estimated $4bn cost headwind incl materials. Inverse normalization of volume and mix/price is a well understood industry risk, which may only start later in the year but could affect investor sentiment early. Fincos should provide the biggest net headwind across the sector, and we factor $1bn at Ford, to $3.5bn. We assume NA adj EBIT $9.4bn with a 9.5% margin matching GM's for the first time in years. Outside NA, we see improvements across refocused Europe and LatAm, while moderate exposure to China is a mild +ve with room to grow despite strengthening domestic competition,” the analyst added.

Finally, the analyst sees two potential surprises from Ford, related to Argo AI (IPO) and Ford Pro, which is “building a compelling eco-system for already loyal customers.”

Ford stock price closed at $22.45 yesterday.

By Senad Karaahmetovic | [email protected]

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