Ford Motor Company (NYSE: F) stock has outperformed over the past 12 months, netting a 104% gain. 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 Q2 sales performance which we will discuss below. This article will breakdown everything investors need to know about the Ford stock forecast.
Table of contents
- Ford Motors to lead the pack in bringing EV’s to scale in the US
- Analysts price targets for Ford stock
- Financial Outlook – Ford Stock Forecast
- The bottom line – Ford stock forecast
Ford Motors to lead the pack in bringing EV’s to scale in the US
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.
On 27 September, Ford announced its plan to bring Electric Vehicles to scale in the United States with the “largest and most advanced auto production complex” in the companies extensive history. The company plans to open a new Mega campus in Tennessee and Twin Battery Plants in Kentucky. Ford will inject $11.4 Billion into the manufacturing projects which are expected to begin production in 2025.
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. 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
The general sentiment across the board of Wallstreet analysts on Ford stock is currently Bullish. The average 12 month price target is $15.98 a share according to WSJ data. This suggests a healthy upside of 11.30% from Ford’s current stock price.
Last month, Bank of America analyst John Murphy raised the firm’s price target on Ford to $18 a share. The analyst expects the semi-conductor shortage to create additional demand which will “be more rationally released over a multi-year recovery,” according to theFly. The target from the Bank of America implies a 25.4% upside.
In late June, UBS analyst Patrick Hummel raised the firm’s price target on Ford to $16 a share. Hummel notes that 43% of consumers indicated they are now likely to consider buying an EV. Hummel noted Ford’s intentions to boost its Electric and Autonomous vehicle investment over the next 5 years.
Financial Outlook – Ford Stock Forecast
What to take away from Ford’s recent Q2 earnings
Ford Motors has carried strong sales momentum into early 2021 with Q1 EV sales breaking company records. However, Ford slightly missed sales expectations in Q2 due the ongoing semi-conductor crisis. In saying this, the company still generated $26.8B Billion in the second quarter, with the Mustang Mach-E driving an uptrend in North American sales.
The Mach-E model currently ranks second in full electric SUV sales behind Tesla’s Model Y. To date, the company has sold 18,855 Mach-E models with Ford’s EV portfolio also includes the growing reservations for the battery-electric F-150 Lightning pickup truck, with 150,000 reservations. Ford have also received 20,000 reservations for its all-electric E-Transit commercial van.
Ford’s revenue forecast
Looking ahead, analysts forecast the company to generate $127.36 Billion in revenue in the 2021 annual year. The 2021 revenue forecast from analysts shows a 9.90% growth YOY. In 2022, the average revenue forecast is $152.05 Billion which highlights the growth potential of the Electric Vehicle and connected services market.
Will the semiconductor crisis impact revenue? – Ford Stock Forecast
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 adjusted Eearning Before Interest & Tax for 2021 to lower by $2.5 Billion due to the current semiconductor shortage. In addition, Ford also expects to lose about 1.1 million units of production in 2021 due to the semiconductor shortage.
More recently, Benchmark analyst Michael Ward noted that Ford “has been hit harder than the other key manufacturers” in relation to the semiconductor crisis. Ward added that the “worst could be over for Ford” as North American production picks up and cash generation for the company will likely provide momentum for Ford stock. The analyst currently has an $18 price target on Ford stock.
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 Mach-E is in high demand in dealer showrooms, with sales up 16% (MoM). Furthermore, the company was able to deliver 15,829 Mustang Mach-E vehicles year-to-date.
“Our newest products, including F-150 PowerBoost, Mustang Mach-E, Bronco and Bronco Sport, are conquesting at a rate that is almost 14 points higher than Ford overall.“Andrew Frick, vice president, Ford Sales U.S. and Canada
The bottom line – Ford stock forecast
Overall, Ford Motor company has performed well in the recent months, which is being reiterated by majority of analysts. The high end targets of $18 a share will definitely excite shareholders as we move into 2021.
The company is confident in its ability to build its new business Ford+ to compete with large scale EV 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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