Goldman Sachs analyst Mark Delaney revisited the banks research coverage of US autos to lower industry forecasts to reflect additional supply chain challenges.
Rising input costs have also contributed to lower estimates and slashed price targets on General Motors (NYSE:GM) and Ford Motor (NYSE:F).
While we continue to expect auto volumes to improve in 2H22 and further in 2023, we believe there is a wide range of potential outcomes stemming from the war in Ukraine and its impact on the supply chain. We continue to believe that stocks of companies that can navigate the current operating environment and capitalize on key growth opportunities like EVs, autonomy, and datacenter will outperform, Delaney said in a client note.
A new price target on Ford is $20.00 per share, down from the prior $22.00. Similarly, the analyst cut GM PT to $65.00 per share from the prior $72.00.
We reduce our EPS estimates for F and GM in 2022 (Ford by 9% and GM by 2%, with GM's exit from Europe reducing the impact vs. Ford), but we assume that higher costs and a slightly more difficult supply dynamic is mostly offset by better pricing given low vehicle inventory (both companies have done well this cycle to mitigate cost pressures with pricing).
On the other hand, the analyst raised EPS estimates for Tesla (NASDAQ:TSLA) to reflect raised EV prices and a slightly higher volume, with the latter a result of the companys ability to navigate the supply chain, recent government approval for the new Berlin factory, and potentially higher demand for EVs following the rise in oil prices.
By Senad Karaahmetovic