By Michael Elkins
Morgan Stanley reiterated an Overweight rating on Ford (NYSE:F) and cut the price target on the stock to $14.00 (From $15.00) following the car maker’s 4Q earnings report. Ford missed 4Q by 30%, the only major miss of the 4Q auto earnings season thus far. The miss left investors struggling with a clear strategy on the way forward.
Analysts wrote in a note, “It’s not without some challenge that we defend the Overweight rating on Ford after the company posted the only major miss of the 4Q auto earnings season thus far and left investors struggling with a clear strategy on the way forward. Do we respect when a management team openly admits to execution missteps and acknowledges material operational gaps to competition? Sure we do. However, Ford management must now provide a roadmap to improving results and demonstrate progress in order to avoid a further de-rating of the stock.”
With rates rising at the fastest clip in recent memory, a resorption of pricing and mix may put an unusually high amount of pressure on margins. Analysts believe that Ford has an opportunity to find cost savings across its portfolio and alternative uses of capital as it reassesses the landscape.
Morgan Stanley forecast Ford to generate $159.0 billion of revenue in FY23 and to deliver 4.4 million units in FY23vs 4.3 million previously. They forecast Ford to generate $7.9B of adj. EBIT in FY23 vs $8.2B previously, while 2023 and ’24 EPS estimates move to $1.28 from $1.30, and $1.24 from $1.30 respectively.
Shares of F are down 0.30% in pre-market trading on Tuesday.