Legacy automaker Ford (F) has been around for a long time. That sheer longevity has given it something of an attraction for investors; if it has been around this long, it is likely to continue being around. And that, in turn, is part of what keeps it alive. But a recent downgrade from Morgan Stanley (MS) did not help matters, and Ford was down nearly 4% in Wednesday afternoon’s trading.
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Morgan Stanley’s Adam Jonas not only cut Ford’s rating from Overweight to Equal Weight, he also pared back the price target on shares, cutting it from $16 to $12. Basically, the problem here is China, where Ford manufactures its Territory compact sport utility vehicle (SUV).
China currently produces nine million more cars than it buys, roughly, which means it has one serious potential to address an export market. Granted, Jonas admits, not all of those nine million cars will find their way to the U.S. But even pursuing other markets—whether European, African, or Asian—will see a loss of market share, and thus, profitability going to Ford and the rest of the automakers in the market as well. Throw in growing regulation on the electric vehicle sector and that will prove a further drag, Jonas noted.
Aces Up Its Sleeve?
Yet Ford does have some other potential advantages making their way to the field. First, new photos recently emerged of the 2024 Mustang Dark Horse, found on AutoBlog. They show a magnificent-looking car that should draw quite a bit of attention in the market, even if economic conditions might forbid many from buying in right now.
Plus, Ford also started production on the electric Capri in Cologne, Germany. That is the second electric car that Ford is producing in Germany, reports note, and Ford needs these to produce wins in short order. The Capri is similar to the Explorer, in that it is an SUV coupe that has “…the same technical basis.” However, the Capri has a “flatter roofline.” Only large battery models will be available at first, but reports note that the Capri will start seeing the smaller battery model by the end of this year.
Is F Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on F stock based on five Buy, nine Hold and one Sell assigned in the past three months, as indicated by the graphic below. After a 10.14% loss in its share price over the past year, the average F price target of $13.67 per share implies 30.75% upside potential.
