Ford Shares Jump on Upgrade from Benchmark

Shares of automobile maker Ford Motor Co. were on the rise in premarket trading on Monday after receiving an upgrade from Benchmark analyst Michael Ward.

In his upgrade, Ward cited expectations that third-quarter earnings and a new management team will provide a near-term catalyst for the stock. He raised his rating to buy from hold and initiated a stock price target of $10. The stock price target from the analyst is 38% above Friday’s closing price of $7.25.

“Better than expected North American production, a positive shift in mix, and improving metrics in the auto credit markets, in our view, are the primary drivers for better than expected earnings performance in the third quarter,” Ward wrote in a note to clients.

“The management changes along with new product momentum and the benefits of cost improvement actions, in our opinion, are positive variables for the stock,” he added.
Ward said, “demand in China has been better than expected and expansion of the Lincoln brand should be a plus for Ford.”

In 2019, the company produced 700,000 F-150 trucks in North America and another 350,000 Super Duty pickups, which Ward estimated accounted for about $40 billion of annual revenue.

“The conversion of two plants (Michigan and Hermosillo) from car production to trucks by the end of 2021, by our estimates, will lead to additional increases in truck mix,” he said.
Ward noted that Jim Farley took over as chief executive in October, and among his first moves was to appoint John Lawler as chief financial officer.

“Both Farley and Lawler, in our opinion, will be perceived as significant upgrades by the investment community and both are viewed positively with the Ford organization,” Ward said.
The company had named a new chief executive, Jim Farley, effective Oct. 1, and also named a new chief financial officer, John Lawler earlier this month.

Ford is scheduled to report third-quarter results on Oct. 28th.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.