Bernstein maintains Ford stock underperform with $7 target

On Tuesday, Bernstein analysts upheld their Underperform rating on Ford stock, maintaining a price target of $7.00. The analysis by Daniel Roeska from Bernstein SocGen Group highlighted that Ford’s first quarter results were in line with previous warnings, showing a marginal performance with the EBIT for Ford Blue in Q1/25 barely breaking even. According to InvestingPro data, Ford currently trades at a P/E ratio of 7.11x, suggesting relatively modest market expectations despite its $42.07 billion market capitalization. Roeska pointed out that the more significant concern was the revelation that tariff-related costs could surge to $2.5 billion in FY25, which could reduce EBIT by $1.5 billion.

Ford has decided to withdraw its full-year financial guidance due to the unpredictability caused by tariffs. The suspension includes forecasts for adjusted EBIT and adjusted free cash flow. Despite this move, Ford announced on April 28 that it would pay a regular dividend of $0.15 per share for the second quarter. InvestingPro analysis shows Ford maintains an impressive 7.37% dividend yield and has consistently paid dividends for 14 consecutive years, demonstrating strong commitment to shareholder returns. Roeska’s report also noted that Ford maintains a robust financial position, with $27 billion in cash and $45 billion in liquidity available.

The suspension of guidance comes as the automotive industry grapples with multiple challenges, including supply chain disruptions and increasing costs. Ford’s decision reflects the difficulty in forecasting financial outcomes amid such economic uncertainties. The company’s affirmation of its dividend payment suggests a commitment to returning value to shareholders even as it navigates these turbulent times.

The Bernstein analysis aligns closely with their recent downgrade, which included a $5.2 billion EBIT estimate for FY25, already factoring in a potential consumer downturn in the latter half of the year. The anticipated impact of tariffs on Ford’s financial performance is substantial, and the company’s suspended guidance indicates a cautious approach to the fiscal year ahead.

Investors and market watchers will likely keep a close eye on Ford’s financial health and strategic decisions as the year progresses, especially in light of the significant tariff-related costs that are expected to weigh on the company’s earnings. Ford’s current cash and liquidity reserves provide some cushion against these challenges, but the long-term effects remain to be seen. InvestingPro data reveals Ford’s relatively high beta of 1.55 and weak gross profit margins of 8.4%, factors that investors should consider when evaluating the stock’s risk profile. For deeper insights into Ford’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Ford Motor Company (NYSE:F) reported a robust first quarter, with adjusted earnings before interest and taxes (EBIT) reaching $1.0 billion, significantly exceeding the estimated $0.2 billion. This strong performance was highlighted by several analysts, including JPMorgan, which reaffirmed an Overweight rating with a $12 price target, noting Ford’s improved warranty cost management and successful product launches. Meanwhile, Deutsche Bank (ETR:DBKGn) raised its price target for Ford to $9 from $7, maintaining a Hold rating, and emphasized the company’s resilience against tariffs and its cost advantage due to its substantial U.S. manufacturing presence.

BofA Securities maintained a Buy rating with a $14 price target, pointing out reduced losses in Ford’s electric vehicle division and the company’s strong position in the core truck market. However, BofA also downgraded Ford’s credit rating to Marketweight, citing increased tariff-related cost pressures and the potential for a CreditWatch Negative action by S&P Global Ratings. Despite these challenges, Ford’s strategic positioning and pricing strategies may offer opportunities for market share gains, as noted by various analysts.

Ford’s decision to withdraw its 2025 financial guidance due to tariff-related uncertainties was a notable development, with TD Cowen maintaining a Hold rating and a $10 price target. Analysts have highlighted Ford’s ability to manage tariff costs better than some competitors, such as General Motors (NYSE:GM). Investors are keenly awaiting Ford’s upcoming earnings call, where the company is expected to provide updated guidance for the full year 2025.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.