Ford Stock (NYSE:F) has outperformed over the past 12 months, netting a 82% gain. Ford Bulls are confident in the Ford Stock Forecast as EV production ramps up and demand for the Mach-E and F-150 Lightning skyrockets. In 2021, Ford was able to attract new investors through its capital intensive investments in new age tech, predominately Electric Vehicles and Autonomous AI.
Ford’s newest EV models include the Ford Mustang Mach-E and the F-150 Pickup truck. According to Morgan Stanley analysts, Ford’s EV Mustang Mach-E launch was successful, with the Electric Mustang stealing vital North American market share from Tesla’s Y Model. This article will dive into the Ford Stock Forecast.
Ford Motors to bring Electric Vehicles to scale in the USA
Firstly, over the past 12 months we have seen a shift of great magnitude towards the electric vehicle industry. This paradigm shift has had a flow on effect on investors, driving EV interest to an all time high. Ford Motors is now in the process of shifting its resources towards delivering Electric Vehicles, in hopes of capitalising on the vastly growing $280 Billion EV market.
On September 27, 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. Ford 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 will begin production in four years.
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 has also made headway in driving greater connectivity by launching Ford Pro, a seperate business under the Ford umbrella that will improve uptime, cost and performance of EV fleets.
“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 on Ford+ initiative
Ford Stock Forecast: What is Wallstreet Predicting?
The general sentiment across the board of Wallstreet analysts on Ford stock is currently neutral. The average price target across the board stands at $20.09, implying a slight upside from the current trading price.
Following the Q3 results, Benchmark analyst Michael Ward raised the firm’s valuation on Ford stock to $20. Ward noted Ford’s Q3 beat saw the company turn cash positive and reinstate a dividend. The analyst has since increased Ford’s sales predictions for both 2021 and 2022 according to theFly.
Ford Stock Forecast: The Financial Outlook
What to take away from Ford’s recent Q3 earnings
In the third quarter, Ford reported revenues of $35.7 Billion, an increase of 33% compared to Q2. The main driver in improved revenues was due to greater semiconductor availability and wholesale vehicle shipments. In particular, with semiconductor supply woes easing in North America, Ford saw regional product shipments increase by 67%.
The good news for investors is Ford’s CEO Jim Farley is confident that Ford is “spring-loaded” for further growth in North America as the semi-conductor crisis eases further in 2022. As for Europe, Ford’s revenue increased by 7% year-on-year to $6.1 Billion. This trend in Europe has remained strong throughout the first three quarters of 2021, with the company generating $18.7 Billion YTD.
Prior to the Q3 earnings release, Ford’s board of directors voted on bringing back a regular quarterly dividend starting next quarter. This will mark the first dividend paid to common stock shareholders since March 2020.
The fourth quarter dividend will be $0.10 per share on outstanding common and Class B stock, which will be paid on December 1 to shareholders. It is worth noting that the cutoff date has already passed, expiring on November 19.
Ford’s Revenue Outlook
Looking ahead, Wallstreet institutions predict Ford to generate $126.83 Billion in revenue in 2021. The forecast from analysts implies a 9.90% growth YOY, outstretching the companies results in 2020.
As for the following year, analysts see Ford generating $144.25 Billion in revenues in 2022. The jump in revenues from 2021 to 2022 highlights the growth potential of the Electric Vehicle and connected services market that Ford aim to break into.
Although Tesla has the first mover advantage in the United States, Ford have the resources to reach economies of scale in a shorter amount of time.
In terms of scale, Ford aim to increase their EV production capacity to 600,000 vehicles by 2023 according to CEO Jim Farley. This will allow Ford to grow its EV sales incrementally while scaling its costs to maximum cost efficiency.
Will the semiconductor crisis impact Ford Revenue?
Ford, alongside most of the vehicle manufacturing industry, has battled with supply chain issues this year. With COVID-19 impacts on production and shipping, semi-conductors have become a rare commodity.
Ford noted in Q2 that their adjusted EBIT will be impacted, losing $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.
Earlier this year, Benchmark analyst Michael Ward noted that Ford “had 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 the Ford Stock. The analyst currently has an $18 price target on their Ford stock prediction.
Despite these supply chain headaches, it seems that the worst may be over for the manufacturing Goliath.
Electric Vehicles are 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 Q3, Ford noted overwhelming demand for the companies All Electric F-150 pick-up truck, which now has over 200,000 pre-orders. This has resulted in Ford doubling their manufacturing output of the F-150 pickup truck to 80,000 vehicles a year.
In addition, the companies Mach-E is in high demand in dealer showrooms across the US. As it stands, the Mach-E currently ranks second in Electric SUV sales behind Tesla’s Model Y in the US. As of Q3, Ford sold 18,855 Mach-E models to date and the demand is not showing any signs of slowing.
“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
FAQ about the Ford Stock Forecast
Across Wallstreet, the average twelve month price target currently stands at $20.09. This implies a slight upside from the current trading price, based on Wallstreet’s forecasts. The highest target on Ford Stock is $25 from Wells Fargo analyst Colin Langan who is optimistic on a multi-year auto recovery.
Following the companies heavy investments in both the EV and AI space, investors flocked towards Ford Stock in the later half of 2021. Some analysts argue Ford stock is overvalued based on historic fundamentals, while others see Ford dominating the EV space in North America and Europe.
Summary: Ford Stock Forecast (NYSE:F)
Overall, Ford Stock is currently trading at a 20 year high as bulls back the companies long term thesis. With a high valuation, majority of the targets on Wallstreet now fall below or on par with the current trading price.
This usually suggests investors are willing to pay more now for Ford Stock based on its predicted future growth. However, other investors may see this as a valuation concern.
Nevertheless, the company is confident in its ability to build its new business Ford+ and expand its EV portfolio. Success in these areas will see Ford go head to head with industry giants including Tesla.
The Q3 results point towards a strong finish to the calendar year as semiconductor woes have begun to ease in North America.
Finally, the Ford Stock Forecast has also been positively impacted by the companies improved guidance. Ford boosted the full-year 2021 adjusted earnings before interest & tax (EBIT) to $10.5 billion-$11.5 billion.
The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. 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.