Ford Motor Company
The Ford Analysts:
- Bank of America analyst John Murphy reiterated a Buy rating and lowered the price target from $22 to $20.
- Goldman Sachs analyst Mark Delaney maintained a Neutral rating and lowered the price target from $14 to $12.
- RBC Capital analyst Tom Narayan maintained a Sector Perform rating and a $13 price target.
- Piper Sandler analyst Alexander Potter reiterated a Neutral rating and a $13 price target.
"Ford's Core to Future transition underway," Murphy said. "Despite the miss, management continued to paint a positive picture for Ford's recent progress."
The analyst said Ford Pro is the core of the company and the priority for capital allocation, illustrated by an announcement to increased production capacity of Super Duty in Canada.
For electric vehicles, the analyst said company commentary points to investments continuing for the segment.
"There is some time to go before all the new investments Ford is making materialize."
Goldman Sachs on Ford: Higher costs for the Ford Blue division came from higher warranty costs and were a key focus from the earnings report for Delaney.
The analyst said lower costs have been an opportunity for Ford to narrow its EBIT margin versus competitors.
"We believe the report will be considered disappointing by some investors given that costs were higher," Delaney said.
The analyst said Ford is taking "good steps" at improving the long-term of the business.
"We maintain our Neutral rating on the stock, with our positive view on the steps Ford is taking to improve its business (especially with software & services and Pro)."
RBC Capital on Ford: The impact of higher costs for Ford Blue may have impacted the company raising guidance, an item expected by investors according to Narayan.
"We expect a sharp negative reaction to shares," he said.
The analyst noted that Ford's new guidance shows an upswing for the Ford Blue segment EBIT, but a downshift for the Ford Pro and Model e segments.
Higher costs hurt the Blue and Pro segment in the quarter, with the Model e segment seeing some improved costs, the analyst added.
"Model E was actually better by $400M."
The analyst highlighted that assessing the improvement in Model E's costs is crucial for the company's future prospects.
Piper Sandler on Ford: The automotive company's second quarter had "lots to like," Potter said in a new investor note.
The unwelcomed warranty headwinds could continue to send shares lower, the analyst said.
"The company is shouldering a higher-than-expected warranty burden," Potter said.
The analyst said Ford saw its EBIT flat quarter-over-quarter in Q2 while revenue was up 12% quarter-over-quarter.
"We are cutting our 2024 EPS estimate as a result."
The analyst said they're less certain that the high end of the EBIT guidance range can be hit after the second quarter results.
"Ford Pro is a unique asset with recurring revenue and persistently high EBIT margin, but this is balanced against nagging quality issues and losses exceeding $1B/quarter in the Model e segment."
F Price Action: Ford shares are down 17% to $11.41 on Thursday versus a 52-week trading range of $9.49 to $14.85. Ford stock is now down 6% year-to-date in 2024.
