There’s an auto maker strutting its stuff on Wall Street and it’s not who you think it is. Industry giant Ford (F) has been posting some unseemly year-to-date gains, with the shares skyrocketing 120% in 2021. In fact, such has been its renaissance, the stock currently nests at a peak last seen in 2011.
F stock’s latest upward movement followed a successful Q3 report in which earnings came in almost two times higher than the Street’s forecast. At the same time, Ford raised its full-year earnings guidance, and restored its dividend.
Jefferies’ Philippe Houchois has been impressed with the performance but that is not the only reason for his upbeat take.
“Presenting good numbers helped of course, but we found Ford management on the call more in control of operations and strategy than any time in the past 2 years despite industry uncertainty,” the 5-star analyst said. “Ford is early in an intense cycle of replacing and reviving key product franchise and playing to brand strengths with FordPro.”
What’s more, with supply challenges to the fore and keeping customers “frustrated,” an auto industry recovery should “logically” take place in 2022-23. And while higher prices and rising rates could affect affordability and pose a risk to demand along with “margin pressure from electrification,” Houchois believes these will be “offset” by Ford’s product cycle.
The analyst counts “Industry leading product activity and structural cost reductions,” as factors which will help Ford deliver “better than industry earnings.” A much-repaired balance sheet “de-risks the funding of transformation,” as Ford pivots toward the new EV, AV and connectivity paradigm. The balance sheet should also get an additional boost from the probable IPOs of Argo AI and Rivian before the end of the year, companies the auto giant is heavily invested in; the latter, particularly, could be worth more than $5 billion to Ford.
To this end, Houchois rates Ford share a Buy alongside a $20 price target. This figure implies a modest upside of 3%. (To watch Houchois’ track record, click here)
Overall, most analysts feel the shares have soared high enough for now; the $17.53 average target suggests the stock will stay rangebound for the foreseeable future. (See Ford stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Source: finance.yahoo.com