Ford Shares Surge as Truck Sales Drive Q3 Earnings

Ford Motor Company (F) shares added 4.41% in extended-hours trade Wednesday after the Detroit-based carmaker reported a surge in quarterly earnings amid better-than-expected demand during the pandemic.

The company posted third quarter (Q3) adjusted earnings per share (EPS) of 65 cents, more than tripling analysts’ expectations of 19 cents a share. Moreover, the bottom line grew 91% from a year earlier. Revenue of $37.5 billion during the period rose by around $500 million from the September 2019 quarter and came in ahead of the $33.98 billion figure Wall Street had expected. “We executed very well this quarter,” Ford CFO John Lawler told investors during the earnings call, per CNBC. “We saw much higher demand than what we expected,” he added.

Management credited the positive results to a strategic shift several years ago of ramping up production of pickups, SUVs, and commercial vehicles while phasing out unprofitable sedans. The company said earlier this month that it had its best quarter of pickup sales since 2005. It also noted that North American results during the quarter helped offset weaker sales in Europe, South America, and China.

Through Wednesday’s close, Ford stock has a market capitalization of $30.63 billion and trades 15.59% lower on the year. However, price performance has improved over the past three months, with the shares gaining nearly 10%. The company has not indicated when it will reinstate its dividend, which it suspended in March due to the uncertainty of the pandemic.

Wall Street View

This month, Benchmark analyst Michael Ward upgraded Ford to ‘Buy’ from ‘Hold’ with a $10 price target. Ward argues the car marker’s new products and the need to replenish inventories of its full-sized pickup trucks should accelerate momentum into 2021.

Other analysts on the Street mostly remain on the sidelines. The stock receives 4 ‘Buy’ ratings, 12 ‘Hold’ ratings, and 1’Sell’ rating. However, the impressive quarter may lead to a string of upgrades, especially in light of newly minted CEO Jim Farley vowing to provide greater transparency. Price targets generally range between $5 and $10, with Thursday’s implied open at $8.05 sitting 2.5% below the median 12-month price target of $8.25.

Technical Outlook and Trading Tactics

Ford shares broke above an ascending triangle in early October before profit-takers moved in ahead of the company’s earnings. An open today back above the psychological $8 level should help swing momentum back to the upside as bulls scramble to rejoin the recent uptrend. Active traders who buy here should look for a retest of a significant zone of resistance between $9.55 and $10.55 while protecting capital with a stop-loss order placed somewhere below $7.50.