On Thursday, Bernstein analysts maintained a Market Perform rating on Ford stock (NYSE:F) with a set price target of $10.70. The firm highlighted challenges for the automaker, including elevated warranty costs and lower production in the first half of 2025, which are expected to create headwinds for the company's wholesale operations.
According to InvestingPro data, Ford's stock currently trades near its 52-week low of $9.49, while offering an attractive 8% dividend yield. InvestingPro's Fair Value analysis suggests the stock is currently fairly valued.
According to Bernstein, Ford's decision to reduce production could significantly impact its financial performance for the year. The analysts expressed concern that the headwinds in the first half of the year might amplify investor worries about Ford's ability to navigate a tactical market.
The question posed by the analysts was whether Ford may have compromised its financial standing for 2025 due to these early challenges. With a gross profit margin of just 7.7% and significant market volatility (Beta 1.65), these concerns appear warranted based on InvestingPro's comprehensive financial health analysis.
The report projected a 15% year-over-year decline in Ford's production volumes for the first half of 2025. During this period, the company plans to sell down its intentionally high inventory levels to boost sales. While there is a possibility for volumes to recover in the latter half of the year, the analysts noted that this recovery is contingent on Ford's effective inventory management in the earlier months. Any missteps could lead to further complications.
Bernstein analysts also adjusted their earnings forecast for Ford. They lowered their adjusted earnings per share (EPS) used for valuation from $1.71 to $1.68 while maintaining the same price-to-earnings (P/E) multiple of 6.4 times next twelve months (NTM) earnings. This adjustment underpins their updated price target of $10.70, which implies a 10% upside from the current level. InvestingPro subscribers can access detailed valuation metrics, including the current P/E ratio of 10.93 and comprehensive financial health scores, along with 8+ additional ProTips about Ford's financial position.
In conclusion, Bernstein's assessment reflects a cautious outlook on Ford's near-term prospects, citing specific operational challenges that could affect the company's performance. The firm's unchanged price target and rating indicate a wait-and-see approach to Ford's strategic execution in the coming months.
In other recent news, Ford Motor Company (NYSE:F) experienced a 4.2% growth in U.S. sales for 2024, largely driven by increased demand for gasoline and hybrid vehicles. The company's total annual sales reached 2,078,832 units, marking a significant rise from the previous year. CFRA analyst Garrett Nelson revised Ford's 12-month price target to $10.00 and maintained a Hold rating on the shares. Nelson also updated the earnings per share estimate for 2024 to $1.83.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.