Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Ford (NYSE:F), currently trading at $11.21 with a market capitalization of $44.46B, announced a $2 billion investment in its Louisville Assembly plant to produce a new midsize electric truck, UBS confirmed Monday while maintaining its Neutral rating and $11.00 price target on the automaker. According to InvestingPro analysis, Ford appears fairly valued at current levels, with a Financial Health Score of FAIR.
The investment, revealed during an event at Ford’s Kentucky facility, complements a previously announced $3 billion investment in Michigan for prismatic LFP batteries to power the new vehicle. UBS clarified that this $2 billion is not incremental spending but is already incorporated in Ford’s existing guidance. The company maintains a strong free cash flow yield and pays a significant 6.73% dividend yield to shareholders, as reported by InvestingPro.
The announcement comes after Ford CFO John Lawler indicated on the company’s second-quarter earnings call that its Model e division would continue making targeted investments. During the same call, CEO Jim Farley mentioned shifting capital toward the Pro commercial division, partially by reallocating resources from future EV programs. With annual revenue of $185.25B and gross profit margins of 7.22%, Ford faces profitability challenges in its transition to EVs. Get deeper insights into Ford’s financial health and 10+ additional ProTips with InvestingPro.
UBS noted that Ford’s investment strategy has evolved from its 2023 plan, which allocated approximately 60% of capital expenditures to Pro and Blue divisions, to its current 2024 plan allocating roughly 75% to these divisions. The firm estimates the current split at approximately 43% Pro, 32% Blue, and 25% Model e.
While the announcement doesn’t appear to change Ford’s actual investment plans, UBS suggested the messaging around increased EV investment contrasts with what many investors want—specifically, delayed EV investment and reduced Model e losses. The firm also pointed out that while the next-generation EV announcement was expected, Ford trails competitors in this area.
In other recent news, Ford Motor Company announced plans to invest approximately $5 billion in its Louisville Assembly Plant and BlueOval Battery Park Michigan. This initiative aims to create or secure nearly 4,000 jobs and will focus on producing a new midsize electric pickup truck and advanced batteries. Additionally, Ford revealed a $2 billion investment in its Louisville, Kentucky facility to support manufacturing vehicles based on its new Universal Vehicle Platform, unveiled at the " Next (LON:NXT) Model T Moment" event. Despite these developments, Bernstein reiterated its Underperform rating on Ford, citing tariff costs and special items affecting the company’s bottom line, with a price target of $8.30. Meanwhile, BofA Securities maintained a Buy rating with a $14.00 price target, highlighting the potential of the new EV platform. Jefferies also adjusted its price target for Ford to $9.00 from $8.00, while maintaining an Underperform rating, noting the company’s net tariff costs. In safety-related news, Ford is recalling over 103,000 vehicles in the U.S. due to issues with damaged axle hub splines, which could lead to vehicle rollaway or loss of drive power. These developments reflect a mix of strategic investments and challenges for Ford in the current market landscape.
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