On Tuesday, Bernstein analysts revised their outlook on Ford (NYSE: F) shares, lowering the price target to $9.40 from the previous $10.70, while maintaining a Market Perform rating. The revision comes amid expectations of a challenging first half of 2025 for the automaker due to several headwinds. The stock, currently trading at $9.24, has declined over 9% in the past week and sits near its 52-week low of $9.12. According to InvestingPro analysis, Ford’s shares appear slightly overvalued at current levels, despite trading at a modest P/E ratio of 6.24.
Analysts at Bernstein highlighted that Ford is anticipated to encounter disruptions throughout the first half of 2025, including lower wholesales, increased overhead costs per vehicle, and pricing challenges, which are likely to negate the company’s Q1 earnings before interest and taxes (EBIT). Ford’s electric vehicle division, Model e, is also expected to face additional cost pressures, delaying its path to improved profitability. Despite these challenges, Ford Credit remains a strong segment, providing some cushion to the EBIT. The company maintains a significant market presence with annual revenue of $185 billion and offers shareholders an attractive 8.12% dividend yield.
The report further suggests that 2025 will be a tactical year for Ford, with a forecast of a year-over-year decline in earnings per share (EPS). Capital expenditures (CAPEX) are projected to stay high, leading to cash flow concerns driven by earnings. Bernstein analysts have chosen to adopt a cautious stance, preferring to wait for clearer insights into the first quarter’s performance and the outlook for the remainder of the year before changing their position on Ford.
The lowered price target reflects the anticipated headwinds and the need for Ford to navigate through a potentially difficult period. Bernstein analysts have expressed their intent to remain on the sidelines, monitoring Ford’s progress as the year unfolds.
In other recent news, Ford Motor Co (NYSE:F)’s outlook has been revised to negative by S&P Global due to weaker-than-expected profitability prospects, despite maintaining strong liquidity with cash balances well above its target. This move comes as Ford’s EBITDA margins are predicted to remain below 8% through 2026, largely due to slower progress on cost reduction, increasing pricing pressure, and sustained losses in its electric vehicle business. Analysts from Freedom Capital Markets, however, have maintained their Buy rating on Ford stock with a steady price target of $17.00, expressing confidence in the company’s long-term financial health.
In terms of sales, Ford reported a 6.3% decline in its U.S. sales for January, attributed to lowered demand for the company’s internal combustion engine vehicles. Meanwhile, the company expects to record a pre-tax gain of approximately $0.7 billion in the fourth quarter of 2024 due to remeasurement gains from its pension and other post-retirement employee benefits plans.
Furthermore, Ford faces potential implications due to President Trump’s intent to impose 25% tariffs on Canada and Mexico. These recent developments highlight the various challenges and opportunities Ford is navigating in the current market landscape.
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