Ford Motor Company (NYSE: F) has performed particularly well over the past year, gaining 130%. Bulls in particular, are confident Ford stock will continue to prosper as Wallstreet continues to back the Electric Vehicle movement. Furthermore, investors have rallied behind the companies announcement on the Ford + initiative and a $30 Billion investment in Electric Vehicles by 2025. The two electric vehicle models expected to drive strong demand are the Ford Mustang Mach-E and F-150 Lightning truck. According to Morgan Stanley analysts Ford’s EV Mustang Mach-E has recently stolen market share from Tesla’s Y Model. This statement has also been recently backed up by Ford’s strong Q1 2021 sales performance which we will discuss below. This article will breakdown Ford Motor’s stock forecast for 2022.
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Ford Motors is changing in 2021
Firstly, over the past 12 months we have seen a shift of great magnitude towards the electric vehicle industry. Hence, this has poured into the markets reflecting in strong growth across a vast range of Electric Vehicle and Energy companies. Ford Motors is now changing its business to deliver Electric Vehicles to compete with giants such as Tesla.
In addition to manufacturing EV’s, the company is also investing in battery technology to equip the business to design and manufacture its own batteries. Lastly, Ford is investing in connectivity and innovation by launching Ford Pro, a seperate business within Ford that will improve uptime, cost and performance of EV fleets.
“I’m excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time…This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands.”said Ford President and CEO Jim Farley in Q4 earnings release
Analysts price targets for Ford stock
Analysts and Ford Motor price forecasts remain slightly bullish come 2021. The average 12 month price target is $12.24 a share according to Market data. This suggests a downside of 12% from the current trading price. However for targets released in the past quarter alone, the average target is $15.33 which suggests an upside of 10.3%. This suggests a recent shift in “smart money” sentiment which is a positive sign for investors. Here are some of the more recent price target forecasts from analysts at larger financial institutions:
Tudor Pickering 5/18/2021 – Analysts initiated coverage with a Buy rating and 12 month target of $17 a share.
Wolfe Research 4/22/2021– Analyst Rod Lache at Wolf Research increased the companies 12 month price target for Ford stock from $13 to $15 a share, suggesting an upside potential of 25% from the current trading price.
Wells Fargo & Company 4/5/2021– Analyst James Dunn upgraded their rating on Ford stock to Overweight, with a current price target at $15 a share.
Jeffries Financial 3/29/2021 – analysts boosted their 12 month price target from $14 to $16 a share whilst maintaining their buy rating.
Barclays 3/25/2021 – Analyst Brian Johnson at Barclays upgraded their rating on Ford Motor from Equal Weight to Overweight. Barclays also boosted their 12 month price target to $16 a share.
When reviewing price targets the most recent targets provide more relevant insight into the current consensus amongst institutions in comparison to older price targets. The recent consensus amongst analysts confirms a bullish hint with a 10% upside from the current trading price.
Financial outlook for Ford motors
Since the initial impacts of COVID-19, Ford had rebounded and produced positive EPS results for the Q3 and Q4 of 2020. Ford has since carried this momentum into 2021 with Q1 sales breaking EV records.
Looking ahead, analysts forecast the company to generate $128.79 Billion in revenue in the 2021 annual year. The 2021 forecast shows improvement YOY from the previous year, which created unique complications due to COVID-19 disrupting the demand and supply of Ford vehicles. Revenue is expected to further improve in 2022, with an average revenue forecast of $151.52 Billion.
However, Ford noted that the global semiconductor shortage is creating uncertainty across multiple industries. The company advised this will effect Ford’s 2021 operating results and will look to provide further updates regarding the shortage. Ford expects 2021 adjusted EBIT to lower by $2.5 Billion due to the current shortage. In addition, Ford expects to lose about 1.1 million units of production in 2021 due to the semiconductor shortage.
EV is the future of Ford Motor Company
Ford is investing in strategic areas like Electric Vehicles, connected services and autonomous vehicles. The CFO affirmed they are confident this investment will provide fortification of the balance sheet and fuel growth in the future. In addition, the companies Q1 Sales release affirmed this confidence in EV sales with 25,980 EV vehicles sold in the quarter which is a 74% increase. Furthermore, the company was able to deliver 6,614 Mustang Mach-E vehicles in the first quarter of 2021.
“Our customers are really embracing our new electrified vehicle lineup. The all-new fully electric Mustang Mach-E and the F-150 PowerBoost Hybrid lifted Ford’s overall electrified vehicle sales to a record start in the first quarter with sales up 74 percent over a year ago.“Andrew Frick, vice president, Ford Sales U.S. and Canada
Overall, Ford Motor company has performed well in the recent months, which is being reiterated by majority of analysts. The high end targets of $17 a share will definitely excite shareholders as we move into 2021. The company is confident in its ability to build its EV business Ford+ to compete with large competitors such as Tesla. However, the current semiconductor shortage will have an impact on the 2021 earnings which is something for investors to monitor.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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