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Bernstein maintains Outperform on Ford, sets $16 target

EditorBrando Bricchi
Published 07/06/2024, 16:14
© Reuters.

On Friday, Ford Motor Company (NYSE:F) sustained its Outperform rating, with a steady price target of $16.00, as affirmed by a leading analyst at Bernstein SocGen Group. The endorsement is based on expectations that Ford's main business will keep performing robustly. This outlook is bolstered by the anticipated benefits from a policy-driven investment cycle.

The analyst foresees a profitable trajectory for Ford's electric vehicle (EV) division, citing significant operating leverage as a key driver. The valuation of Ford by the analyst employs a near-term, blended adjusted earnings per share (EPS) for the years 2024 and 2025, estimated at $2.23. This figure is a combination of the projected adjusted EPS of $2.24 for 2024 and $2.20 for 2025.

The price target is anchored on a price-to-earnings (P/E) multiple of 7.2 times, which is higher than Ford's current trading level. This P/E ratio is chosen to reflect a bullish stance on the company's long-term prospects, yet it remains below the historical averages for the automotive giant.

The analyst's perspective suggests confidence in Ford's ability to navigate the challenges within its EV unit and capitalize on the opportunities presented by the investment cycle influenced by governmental policies. The calculated P/E multiple indicates a belief in the company's growth potential that exceeds market expectations but does not reach the peaks seen in the past.

In conclusion, Bernstein SocGen Group's current analysis upholds a positive view on Ford's stock, with expectations for continued success in its core operations and a turnaround in its EV business contributing to the $16.00 price target.

In other recent news, Ford Motor Co reported an 11% surge in U.S. auto sales in May, with sales figures climbing to over 190,000 vehicles. The increase was largely driven by strong consumer demand for SUVs, pickup trucks, and hybrid vehicles. On the financial front, Ford's first-quarter earnings for 2024 were slightly below JPMorgan's high-end forecast but exceeded consensus expectations. JPMorgan has maintained its Overweight rating on Ford, signaling confidence in the company's performance.

Meanwhile, a study by J.D. Power indicated a decline in U.S. interest in purchasing electric vehicles (EVs), with Ford experiencing a $1.3 billion operating loss in its EV and software division for the first quarter. In response to this trend, Ford has made strategic leadership changes to enhance its Ford+ plan for growth. John Lawler, the current CFO, is set to become vice chair, and Sherry House will join the company, transitioning into the CFO role by early 2025.

Lastly, the National Highway Traffic Safety Administration (NHTSA) has expressed concerns over Ford's recall of more than 42,000 SUVs due to potential fuel leaks. The NHTSA criticized Ford's current recall plan, stating that it fails to address the root cause of the problem. These are some of the recent developments surrounding Ford Motor Co.

InvestingPro Insights

As Ford Motor Company (NYSE:F) garners an optimistic outlook from Bernstein SocGen Group, real-time data from InvestingPro further enriches the analysis. Ford's current market capitalization stands at a robust $48.03 billion, reflecting the magnitude of its presence in the automotive sector. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is 12.23, which is notably lower than the P/E ratio of 7.2 times suggested by the analyst for their valuation. This indicates that Ford is trading at a low P/E ratio relative to near-term earnings growth, an InvestingPro Tip that aligns with the bullish stance of the analyst.

Moreover, Ford's dividend yield is an attractive 6.46%, a testament to its commitment to returning value to shareholders, having maintained dividend payments for 13 consecutive years. This significant dividend, coupled with a P/E ratio that suggests room for growth, could be a compelling combination for investors seeking both income and potential capital appreciation.

For those seeking to delve deeper into Ford's financial health and prospects, InvestingPro offers additional insights and metrics. Subscribers can access these valuable resources and benefit from a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With several additional InvestingPro Tips available, investors can gain a comprehensive understanding of Ford's position in the market and make informed decisions.

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

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