Ford Stock (NYSE:F) has outperformed over the past 12 months, netting a healthy 20% gain. Ford Bulls are confident in Ford’s long term thesis as EV production ramps up and demand for the Mach-E and F-150 Lightning skyrockets. In addition, 2021 marked the year 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. For now, the companies promising EV business will remain with the Ford domain instead of becoming an independant spin-off. Its EV business will be called Ford-E, while its combustion engine business will be Ford-Blue and its software business will be Ford Pro.
All three departments come under the one Ford umbrella, which is a decision Wallstreet has responded positively to. RBC Capital analyst Joseph Spak applauds Ford’s move to reorganize into two distinct auto units, reiterating a $22 price target on Ford stock. With plenty to discuss, the article will dive into what you need to know about the Ford Stock Forecast.
Can Ford Motor’s Takeover EV Marketshare in the United States?
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 mixed. The average price target across the board stands at $21.96, implying a Ford has substantial room to grow from its current price of $16 a share.
Following the Q4 results, Deutsche Bank analyst Emmanuel Rosner lowered the firm’s price target on Ford Stock to $21 from $24. Rosner says that while investors focused on Ford’s Q4 earnings miss and a low implied 2021 exit rate, it is management’s in-line 2022 outlook that concerns him more, viewing it as “potentially aggressive.”
JPMorgan analyst Ryan Brinkman has taken a more bullish approach raising the firm’s price target on Ford Stock to $23 with an Overweight rating. Brinkman raised Ford’s target to account for the slightly higher estimates and to account for the automaker’s stake in Rivian (RIVN) at fair market value versus cost previously.
Ford Stock Forecast: What to take away from Ford’s recent Q4 earnings
In the third quarter, Ford reported revenues of $37.7 Billion, an increase of $1.7 Billion. The main driver in improved revenues was due to higher net pricing and mix improvement, offset partially by lower volume. This result saw Ford post $136.3 Billion in annual revenue, beating Wallstreet consensus of $126.83 Billion.
However, Ford’s total number of automobiles sold came in below analysts’ expectations and ongoing supply chain issues are expected to lead to a decline in vehicle sales in the first quarter of FY 2022. Investors didn’t react to well to this news, leading to a 13% drop in Ford’s share price following its Q4 results.
Ford’s Revenue Outlook
Looking ahead, Wallstreet institutions predict Ford to generate $146.17 Billion in revenue in 2022. The forecast from analysts implies a 15% growth YOY, however questions remain with supply chain constraints and additional market volatility concerns.
As for the following year, analysts see Ford generating $160.48 Billion in revenues in 2023. The jump in revenues from 2022 to 2023 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 supply constraints 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.
However this is not news to investors, Ford noted in Q2 that their adjusted EBIT will be impacted, losing $2.5 Billion due to the current semiconductor shortage. In addition, Ford was expected to have lost about 1.1 million units of production in 2021 due to the semiconductor shortage.
Benchmark analyst Michael Ward noted that Ford “had been hit harder than the other key manufacturers” in relation to the semiconductor crisis.
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.
By the end of 2023, Ford will have the global capacity to produce 200,000-plus Mustang Mach-E SUVs and 150,000 F-150 Lightning trucks. Ford has also begun shipping the all-new E-TransitTM, the electric version of America’s best- selling commercial van1, from Kansas City Assembly Plant. Demand is strong, with more than 300 customers placing orders for 10,000-plus E-Transit vans.
FAQ: Ford Stock Forecast
Is Ford a Buy Sell or Hold?
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. However, since its recent decline Ford is currently trading at 4 month lows.
Is Ford stock predicted to rise?
Ford Stock Forecast: Across Wallstreet, the average twelve month price target currently stands at $21.96. This implies a upside from the current trading price, based on Wallstreet’s forecasts. The highest target on Ford Stock is $23 from Wells Fargo analyst Colin Langan who is optimistic on a multi-year auto recovery.
When will the Ford F-150 Lightning begin deliveries?
Ford Stock Forecast: Summary
Overall, Ford Stock is currently trading below the average price target on Wallstreet following its Q4 sell-off. With a lower valuation, majority of the targets on Wallstreet now are above or on par with the current trading price.
This usually suggests investors are practising caution on Ford Stock with Q1 expected to be affected by Supply constraints and other market factors impacting the bullish thesis for 2022. However, other investors still see this current price 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.
Follow us on Google News
Follow us on Google News here to get minute-by-minute updates on when we post on any device via the Google News App. You can also subscribe to notifications on Desktop by clicking the red notification bell in the bottom right corner.
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.