Bernstein initiated coverage of Ford Motor Company (F) on Thursday, giving it an Outperform rating and setting a 12-month price target of $16.
Financial experts highlighted that the automaker continues to generate significant profits from its primary markets and emphasized the substantial growth potential in the profitability of its electric vehicle (EV) division.
Bernstein predicts that Ford will reach the upper end of its 2024 fiscal year EBIT (earnings before interest and taxes) forecast, which ranges between $10 billion and $12 billion. The firm’s analysts anticipate a 15% increase in average EBIT estimates for 2024 and a 17% increase in average EPS (earnings per share) estimates.
These projections are based on the product update in the United States, reduced losses in the Model e division, and improved expense management across the company, according to the analysts.
Bernstein’s positive outlook is supported by the expected profitability increase in Ford’s Model e division and a strong product cycle in the Professional segment. Analysts believe this will help Ford mitigate pricing pressures in both domestic and global markets.
“This results in approximately $12 billion and $11.6 billion in adjusted EBIT for 2024 and 2025, respectively. With the launch of Ford’s second-generation EV platforms, we foresee significant profit potential as the EV division shifts from loss to profit,” they stated.
Additionally, Bernstein noted the opportunity for Ford’s EV division to turn financial losses into profits with the upcoming EV platforms. Acknowledging potential unforeseen challenges in cost management or growth within the Professional segment, analysts identified the primary short-term risk as being related to economic cycles, with medium-term risks involving the need to adapt to faster-than-expected growth in the EV market.
“We anticipate that company management will revise its 2024 earnings forecast upward and provide updated (and possibly more accurate) long-term targets to the market. Both developments could serve as significant positive catalysts for the company’s stock price.”
Ford’s stock price rose by 0.75% in pre-market trading. Wall Street analysts hold varied views on the stock; 13 analysts recommend Buy, 21 recommend Hold, and 4 recommend Sell.
Source: investing.com
