Ford Motor

Ford Motor U.S. Auto Sales Recovered in Q3; Target Price $7.54

Ford Motor Co, an American multinational automaker, said on Friday that its third-quarter U.S. auto sales were up 27.2% as the industry recovered at a stronger than expected pace from the COVID-19 demand slowdown, sending its shares up over 2%.

The U.S. producer of cars and trucks said with the help of stronger retail sales and rapidly recovering commercial sales, Ford retail share of the industry grew by an estimated 0.2 percentage points, while Ford’s Q3 total share expanded by 0.8 percentage points. Excluding discontinued cars, Ford retail sales were up 1.3%.

Ford’s overall Q3 pickup sales of combined F-Series and Ranger totalled 249,997 pickups. This represents Ford’s best Q3 pickup sales since 2005, with combined sales up 4.0% over a year ago. F-Series Q3 retail sales up 10.1% over a year ago and are back above pre-coronavirus sales levels. Total F-Series sales of 221,647 for the quarter were up 3.5%, the company said.

The second-largest U.S. automaker, which announces its quarterly sales volumes a day later than the rest of the industry, said it sold 551,796 vehicles in the country in the quarter, down from 580,251 a year earlier. Its sales were, however, up 27.2% when compared with the preceding quarter, Reuters reported.

At the time of writing, Ford Motor’s shares traded over 2% higher at $6.89 on Friday; the stock is also down about 30% so far this year.

Executive comment

“Despite the challenging pandemic environment, our retail unit sales were down only 2% and we had our best third quarter of pickup truck sales since 2005. F-Series finished the quarter on a high note with September sales up 17.2% with over 76,000 F-Series pickups sold. This is a testament to our winning product portfolio and the performance of our great dealers,” said Mark LaNeve, Ford vice president, U.S. Marketing, Sales and Service.

Ford Motor stock forecast

Ten analysts forecast the average price in 12 months at $7.54 with a high forecast of $8.00 and a low forecast of $4.90. The average price target represents an 11.13% increase from the last price of $6.79. From those 10, three analysts rated ‘Buy’, six analysts rated ‘Hold’ and one rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $8 with a high of $12 under a bull scenario and $4 under the worst-case scenario. Evercore ISI raised the price target to $8 from $5; Citigroup upped their stock price objective to $7.5 from $5.5 and Ford Motor had its target price raised by Credit Suisse Group to $8 from $7. The brokerage currently has a neutral rating on the auto manufacturer’s stock.

A number of other equities research analysts have also recently issued reports on the stock. Barclays upped their price objective to $7 from $4 and gave the company an equal weight rating. Royal Bank of Canada dropped their price target to $5 from $6.50 and set a sector to perform rating.

It is good to hold now as 50-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

Analyst views

“We raise our 2020 Ford EPS forecast to ($0.90) vs. our prior forecast of ($1.30), while for 2021 and 2022 our EPS rises to positive $0.75 and $1.25 vs. our prior forecast of $0.30 and $0.80 respectively. On our revised price target of $8, Ford trades at just over 10x our 2021E EPS. Currently, the stock trades at just over 9x our revised 2021 EPS forecast,” Adam Jonas, equity analyst at Morgan Stanley noted in June.

“We raise our 3Q N. American Ford volume forecast to negative 12% Y/Y vs. down 15% previously. Our 4Q volume is revised to down 3% vs. down 5% previously. This slight upward adjustment reflects stronger than expected US SAAR, a rebound in used vehicle prices, and more supportive auto credit vs. our prior forecasts,” he added.

Upside and Downside Risks

Upside: 1) More detail around restructuring actions. 2) Positive share gains in pickups, Ford’s strongest segment. 3) Decomplexification actions. 4) Launch execution. 5) Further announcements around EVs or AVs- highlighted by Morgan Stanley.

Downside: 1) US SAAR resiliency (2020 base case 14.0MM). 2) Further COVID-19 impacts. 3) The F-150 pickup truck loses market share. 4) Slowdown in key oil-dependent end markets. 5) Launch / Warranty issues continue to remain a problem.