Analysts are increasingly optimistic about the future of Ford Motor after the company reported better-than-expected earnings for the fourth quarter. Despite the impact of a lengthy strike by United Auto Workers, Ford managed to achieve an operating profit of $1.1 billion, surpassing Wall Street’s projected figure of $900 million. This is a substantial improvement compared to the same period last year when Ford reported an operating profit of $2.6 billion.
Ford’s positive guidance for the future has also caught the attention of investors. The company expects to generate an operating profit between $10 billion and $12 billion by 2024, exceeding the consensus forecast of $10 billion. As a result, Ford’s stock price rose by 6% to $12.79, outperforming the S&P 500 and Nasdaq Composite, which only saw marginal gains of 0.3% and 0.5% respectively.
The impressive earnings report has prompted analysts to revise their price targets for Ford’s stock. According to FactSet, the average analyst price target now stands at about $12.75, up from $12.50 prior to the announcement. One notable revision came from Citi analyst Itay Michaeli who raised his price target to $16 per share, citing that Ford’s outlook highlights several underappreciated aspects of the company’s story, including its Pro franchise, product cycle, and resilient U.S. auto demand. Michaeli maintained his buy rating on Ford’s shares.
Ford’s commercial business, known as Ford Pro, also demonstrated strong performance, with sales growing by 11% year over year and an impressive operating profit margin of nearly 12%. This is significantly higher than Ford’s overall profit margin for 2023, which was approximately 6%.
All in all, Ford’s latest earnings report has left analysts and investors feeling optimistic about the company’s future prospects. With a solid financial performance, positive guidance, and notable growth in its commercial business, Ford Motor is on track to achieve success in the years ahead.
BofA Securities Analyst Rates Ford Shares as Buy
BofA Securities analyst John Murphy has rated Ford shares as Buy. After analyzing the company’s earnings, Murphy increased his target price from $19 to $21 per share. He attributed the strong performance in the fourth quarter to solid business execution and strong pricing strategies.
CFRA Analyst Maintains Hold Rating for Ford Shares
CFRA analyst Garrett Nelson has maintained a Hold rating for Ford shares. However, he raised his price target by $2 to $13 per share after reviewing the report. Nelson believes that although Ford has resolved the strike issue, it will still face challenges in achieving favorable top-line comparisons in the near future.
Below Average Popularity Among Analysts
Compared to other stocks, Ford shares are slightly less favored among analysts. Approximately 37% of analysts covering Ford rate the shares as Buy. This is lower than the average Buy-rating ratio of about 55% for stocks in the S&P 500.
Uncertainty Surrounding Ford’s Operating Profit Growth
Despite Ford’s full-year 2023 operating profit reaching $10.4 billion, investors remain uncertain about the company’s ability to sustain growth. While Ford witnessed an 11% increase in sales in 2023, in line with the overall growth in U.S. light vehicle sales, such significant growth is not anticipated in 2024.
Ford Stock Performance and Labor Impacts
Despite achieving near-record operating profit during a year that experienced a labor stoppage, Ford stock has declined by approximately 10% over the past 12 months.
