Ford stock could climb another 12% on a refreshed vehicle lineup and a boost from inflation, JPMorgan says

Gabrielle Union in the Ford Maverick.
Ford Maverick.

Ford stock could climb another 12% with a boost from its refreshed vehicle lineup and inflation, JP Morgan says.

In a note to clients on Friday, JP Morgan analysts led by Ryan Brinkman reiterated their “overweight” rating on shares of Ford and increased their price target to $18 from $16.

The price target represents a potential 12% jump from Thursday’s closing share price.

Brinkman and his team said they expect Ford to benefit from the improved availability of semiconductors, a strong price/mix due, at least in part, to inflationary forces, and its new electric vehicle lineup.

Brinkman said, “a plethora of factors including unprecedented fiscal stimulus and extraordinarily accommodating monetary policy in conjunction with the reopening of the economy” are helping boost prices for electric vehicles, which is a direct benefit to carmakers like Ford.

The JP Morgan team noted that “the offsetting impact of raw material costs” usually lags behind price increases. They gave the example of steel which usually is “locked in for several quarters in advance.”

Price increases are also a result of rising demand, according to JP Morgan. Inventories at the end of May stood at just a 23 day supply, a record low, the firm said.

Brinkman also noted rising reservations for Ford’s new vehicle lineup show the company has hit the mark with their offerings, and not just in the US but internationally as well-particularly in South America and China.

The new Bronco boasts more than 190,000 reservations to date, JP Morgan says, and the F-150 Lightning electric vehicle received 44,500 reservations “and counting” in less than 48 hours after its release, according to CEO Jim Farley.

The JP Morgan analysts said in their note that a refreshed F-150 has historically led to a “substantial improvement” in North American profitability.

JP Morgan used a 4.25x multiple on their 2022 EBITDAPO estimate to arrive at their $18 price target.

The analyst support for Ford comes as the company is set to release a new small pickup truck called the Maverick on Tuesday, June 8.

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Ford jumps to a 6-year high after it reports a 184% surge in electric vehicle sales in May

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  • Shares of Ford hit a six-year high on Thursday, jumping as much as 7% following its May sales report.
  • The company said it saw a 184% surge in electric vehicle sales, in part driven by the Mustang Mach-E.
  • Ford is up as much as 80% year-to-date as investors reward its jump into electric vehicles.
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Ford surged as much as 7% to a six-year high on Thursday after it reported May sales that showed a massive jump in electric vehicle sales.

The company’s EV strategy appears to be paying off following the release of its Mustang Mach-E and unveiling of the F-150 Lightning pickup truck. May sales for the 117 year-old automaker jumped 4% year-over-year to 161,725 vehicles.

Ford’s EV sales saw a 184% spike to 10,364 units in May, and signs are building that the company could be slowly taking market share away from Tesla. The electric version of Ford’s Mustang topped car sales for the small but influential EV market in Norway in May. Ford’s EV sales in Norway edged out EVs from both Toyota and Tesla.

Total Mustang Mach-E sales were 1,945 for the month of May. Hybrid versions of Ford’s F-150, Escape, and Explorer vehicles also helped boost sales for the company.

EV sales weren’t the only bright spot for Ford. The company said its SUV sales in May jumped 29% and recorded its best May retail sales since 2003.

The strong sales growth for Ford in the EV space could be in the early innings, as it is still working to ramp up production of its Mustang Mach-E and begin selling its F-150 Lightning truck. And new polling data suggests that the electrified F-150 will be a hit with consumers.

A poll conducted by Piplsay showed that 32% of Americans are most impressed with the F-150 Lightning in the electric pick-up space. Tesla’s Cybertruck rounded out second place, with 24% of Americans most impressed by the futuristic-looking pickup truck.

Still, Ford has a lot of catching up to do with Tesla in terms of EV sales, as the California-based auto manufacturer remains the undisputed leaded in EV sales. Tesla sold nearly 500,000 EVs in 2020, and future projections suggest the company could hit 1 million EV sales by 2022.

But so far this year, Ford’s share outperformance of Tesla continues. Shares of Ford are up about 80% year-to-date, while Tesla is down about 15% year-to-date.

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Ford climbs 9% after saying it will boost electric-vehicle spending to $30 billion by 2025

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  • Ford climbed as much as 9% Wednesday after revealing plans to boost its electric-vehicle investment to $30 billion by 2025.
  • The automaker also said it expects electric vehicles to make up 40% of its global sales by 2030.
  • The announcements were made during Ford’s Investor Day, its first under CEO Jim Farley.
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Shares of Ford Motor climbed as much as 9% on Wednesday after the automaker revealed plans to boost its electric-vehicle investment to more than $30 billion by 2025, up from its previous $22 billion target.

The company also said it expects electric vehicles to make up 40% of its global sales by 2030.

The series of announcements were made during Ford’s Investor Day conference on Wednesday, the first under CEO Jim Farley who assumed his post in October 2020. Farley came to Ford in 2007 after a career at Toyota.

“While the stocks and the EV space are clearly going through a painful digestion period, we view this as a short-term pullback in a bullish multi-year upward rally,” Wedbush analyst Dan Ives said in a note Wednesday.

He added: “We forecast the EV market represents a $5 trillion [total addressable market] over the next decade with many EV original equipment manufacturers/supply chain players poised to be major winners over the coming years in this green tidal wave.”

The rationale behind the new plan dubbed “Ford+” is for investors to shift their perspective of the company from an automaker to a technology firm instead.

The company under the plan aims to deliver an 8% operating-income margin by 2023.

Ford joins other automakers worldwide in transitioning gasoline-powered vehicles into electric-powered ones in a bid to promote a greener environment and to compete with the leading electric-vehicle makers such as Tesla and Volkswagen.

General Motors in January 2021 said it will end all sales of gas-powered vehicles by 2035.

Thus far, Ford has amassed 70,000 reservations for its F-150 Lightning, an all-electric version of its iconic pickup truck that was unveiled one week ago.

“As more companies make the commitment to go carbon neutral, they are going to expect electric products that can integrate into their operations easily,” Jim Farley, Ford president and CEO, said in a statement in May. “Ford is so uniquely positioned to answer this call because we have a zero-emissions pickup and van, many of our customers want both vehicles in their fleet.”

US President Joe Biden last week tested Ford’s electric F-150 prototype himself during a visit to the Ford plant to tout federal investment in EVs.

The president has committed $174 billion to boost EV production under his massive $2 trillion infrastructure plan.

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Ford extends 3-day surge to 23% as Rivian’s big capital raise boosts the company’s electric-car prospects

Rivian R1T.
Rivian R1T.

  • Ford soared as much as 12% on Thursday, extending its three-day surge to more than 23%.
  • The move higher materialized as hype over electric vehicles continues to push auto stocks higher.
  • On Wednesday, Rivian, an electric truck start-up that counts Ford as an investor, raised more than $2.65 billion at a valuation of $27.6 billion.
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Investor hype for electric vehicle manufacturers seems to have spilled over into Ford this week, with the stock surging as much as 23% since Tuesday.

The move higher materialized after Rivian, an electric truck start-up that counts Ford as a minority owner, raised $2.65 billion at a valuation of $27.6 billion on Tuesday. The raise will help Rivian push forward with its production schedule as it aims to begin delivering vehicles by the end of the year.

Ford has an undisclosed stake in Rivian, having invested $500 million in the company in April 2019. Rivian’s $28 billion valuation is catching up to Ford’s, which was hovering at $44 billion as of Thursday.

But Ford also has electric vehicle ambitions of its own. The company is on the verge of launching the electric version of its Mustang, the Mach-E. 

After analysts at JPMorgan test drove the Mach-E, they said in a note on January 8, “Ford is showing more and more signs of becoming a credible contender in battery electric vehicles.”

Ford is also developing an electric version of its pick-up truck, the F-150, though there is no official release date for the vehicle. 

Read more: Goldman Sachs reveals the 8 ‘green-energy majors’ that are set to jump in value in a sector worth trillions of dollars as the renewables race heats up

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