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What's Behind Ford Stock's New Sell Rating?
FFord Motor(F) Kiplinger.com·2024-12-16 17:21

Core Viewpoint - Ford Motor's stock is experiencing a decline following a downgrade by Jefferies from Hold to Underperform, with a reduced price target of 9from9 from 12, amid concerns over inventory issues, European operations, and high warranty costs [1][6]. Group 1: Stock Performance and Analyst Ratings - Ford's stock has dropped over 16% year-to-date in 2024, disappointing investors [1]. - The average analyst target price for Ford stock is 11.91,indicatinganimpliedupsideofabout1911.91, indicating an implied upside of about 19% from current levels, with a consensus recommendation of Hold [7]. - Bernstein maintains a Market Perform rating with an 11 price target, citing high market share in U.S. trucks and an improving battery electric vehicle story, but anticipates significant pricing headwinds in upcoming quarters [8]. Group 2: Inventory and Financial Concerns - De-stocking is a significant issue for Ford, with inventory drift potentially aiding in achieving the guided 8billioninfreecashflow,butitalsocreatesanoverhanginto2025[2].−AnalystPhilippeHouchoishighlightsagapofapproximately8 billion in free cash flow, but it also creates an overhang into 2025 [2]. - Analyst Philippe Houchois highlights a gap of approximately 8.5 billion between provisions for quality and warranty issues and actual cash outflows since 2020, equating to about 2pershare,whichcouldcontinuetoimpactFord′snetcashandbalancesheetwithoutimprovementsinquality[6].Group3:StrategicDecisionsandMarketPosition−ThereareloomingstrategicdecisionsregardingFord′sEuropeanpresence,withconcernsaboutmaintainingoperationsduetolossofscaleinprivatevehicles,althoughexitingEuropecouldnegativelyaffectPro′searnings[6].−ArgusResearchholdsabullishoutlookonFord,ratingitaBuywitha2 per share, which could continue to impact Ford's net cash and balance sheet without improvements in quality [6]. Group 3: Strategic Decisions and Market Position - There are looming strategic decisions regarding Ford's European presence, with concerns about maintaining operations due to loss of scale in private vehicles, although exiting Europe could negatively affect Pro's earnings [6]. - Argus Research holds a bullish outlook on Ford, rating it a Buy with a 13 price target, citing the company's focus on cost reduction and profitability potential due to its global scale and strong brand reputation [9][10].