Ford down after Wolfe downgrades stock, identifies ~$4bln of cyclical headwinds

Investing.com -- Ford Motor Company (NYSE: F) may face roughly $4 billion headwind in 2025, on cyclical pressures and an uncertain cost outlook, Wolfe analyst said as it downgraded the American automaker to "underperform" from "peer perform".

“While we expect 2025 to be challenging for all automakers, we see the most downside risk to Ford,” analyst Emmanuel Rosner wrote.

Brokerage has a price target of $8 on the stock, a 25.5% downside to the its last close.

The analyst noted potential risks from price deflation and the fading impact of inventory restocking, "exacerbated" by Ford’s inventory build-up in the fourth quarter. Ford is also navigating unfavorable mix dynamics, particularly in its profitable Pro segment.

On pricing, Wolfe flags early signs of softening in key segments, such as pickups, with Ford management expecting industry-wide pricing to decline in 2025. Aggressive discounting by competitors is adding to the pressure.

Ford's Super Duty truck production is projected to normalize after strong demand post-redesign, potentially creating a notable drag on earnings. Additionally, brokerage anticipates significant cash flow pressures stemming from destocking-related impacts, which may exceed standard working capital metrics.

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