Ford Raises Q2 EBIT Estimates, Claims Vehicle Orders are Expanding

The global automaker, Ford Motor Company (F), announced that second-quarter earnings before interest and taxes (EBIT) will be higher-than-expected and considerably higher compared to the year-ago period. Q2 results are scheduled for July 28.

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Despite industry-wide semiconductor shortages, Ford is witnessing an improvement in its motor business, propelled by lower-than-estimated costs and favorable market conditions. (See Ford stock chart on TipRanks)

Additionally, Ford Credit is benefitting from higher vehicle auction values.

However, the company stated that net income for the second quarter will be lower than in Q2 FY20 when a $3.5 billion gain on Ford’s investment in Argo AI was included.

The company’s CEO Jim Farley said, “We’re providing customers with great value today and there’s much more on the way, because we’re executing Ford+ from strength – with iconic nameplates and leading positions with retail and commercial customers around the world, and the best financing company in our industry in Ford Credit.”

Reservations for its new vehicles have expanded to 190,000 for the reimagined full-size Bronco SUV, 125,000 of which have already been converted to orders. Also, Ford has received 100,000 orders for the battery-electric F-150 Lightning pickup, 36,000 for the all-new Maverick compact pickup, and 20,000 for the all-electric E-Transit commercial van.

BofA Securities analyst John Murphy recently updated his long-term Electrical Vehicle penetration forecast for the U.S. market to 7% by 2025 (up from 4.5%), and for 2030, he sees EV penetration of 20% (up from 12.5%)

Having an overall bullish outlook for the EV sector, supported by favorable regulations under the Biden administration, Murphy reiterated a Buy rating on Ford with a price target of $17, implying 15.1% upside potential to current levels. Shares have gained 65% over the past six months.

Consensus among analysts is a Moderate Buy based on 9 Buys, 6 Holds, and 1 Sell. The average analyst price target of $15.13 implies that shares are almost fully priced at current levels, with approximately 2.4% upside potential over the next 12 months.

Ford scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.