Ford stock shakes off $1.5 billion hit from Novelis fire on news plant will reopen this year

Core Viewpoint - Ford reported third-quarter results that exceeded expectations, but anticipates financial impacts from the Novelis aluminum plant fire affecting F-150 pickups and SUVs, although the plant is expected to reopen earlier than initially projected, leading to a positive stock reaction [1][4]. Financial Impact - The Novelis aluminum plant fire is projected to create a $1.5 billion to $2.0 billion adjusted EBIT headwind in 2025, affecting full-year cash flow, but Ford expects to mitigate at least $1 billion of this impact in 2026 [2]. - Ford adjusted its full-year guidance lower, now forecasting adjusted EBIT of $6 billion to $6.5 billion (down from $6.5 billion to $7.5 billion) and adjusted free cash flow of $2 billion to $3 billion (down from $3.5 billion to $4.5 billion) [3]. Production Adjustments - Ford plans to increase F-150 and F-Series Super Duty production by over 50,000 trucks in 2026 to meet demand and recover from production losses due to the Novelis fire, while pausing F-150 Lightning EV pickup production to prioritize gas and hybrid truck production [5]. - Ford's CFO indicated that the company would have raised its full-year guidance if not for the Novelis fire, with adjusted EBIT tracking at over $8 billion for the year [4]. Analyst Insights - Bank of America analyst Federico Merendi viewed Ford's updates positively, raising the price target to $14.50 from $13.50 and maintaining a Buy rating [5]. - Merendi also noted that Ford expects to recover approximately half of the EBIT lost in Q4 2025 in 2026, with potential benefits from a more favorable regulatory environment and lower warranty costs, projecting adjusted EBIT for 2026 in the range of $8.5 billion to $10.5 billion [6].