It was a bit more bad news for legacy automaker Ford (F), thanks to a new report from TD Cowen analyst Itay Michaeli. Michaeli noted that, while General Motors (GM) stock had the ability to potential double, Ford shares simply did not. But this meant surprisingly little to investors, as shares jumped up over 3% in Friday afternoon’s trading.
Michaeli relaunched coverage of Ford recently, declaring it a Hold with a $10 per share price target. This is a pretty long drop from last May, when Michaeli, then at Citi, had a Buy rating on Ford with an $18 price target. Ford’s biggest problems right now, Michaeli noted, are still-high dealer inventories and still-high warranty costs, which are at least partially due to the scads of recalls that we have been hearing about lately, many of which we covered right here.
All is not lost for Ford, Michaeli notes, claiming to be “…more bullish over the long term…”. But Michaeli is also “…awaiting a more convincing entry point given a lack of visible earnings catalysts until at least [the second half of the year]…,” reports noted. Despite this, Michaeli has a price target of $105 on General Motors, thanks to recent share buybacks and rising sales in electric vehicles, points Ford has not managed to emulate.
And Speaking of Warranty Costs
It is almost not surprising at this point to hear about another Ford recall, which it actually did issue on certain models in its 2022 to 2024 lineup of Ford F-150 Lightning pickups. Reports note that the issue here is a problem with the high voltage battery cells, which could ultimately produce a short circuit after repeated charge and discharge cycles, which are basically how electric vehicles work.
On the plus side, Ford is not currently aware, reports note, of any crashes related to this. However, Ford is aware of “…one claim of injury and five reports of vehicle fire…” that could, possibly, be connected to this. That is putting a little extra urgency into the process. Thankfully, though, the recall only relates to 950 vehicles, and a fix is ready at dealerships for replacing the high voltage battery array as needed.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on four Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 12.50% loss in its share price over the past year, the average F price target of $10.71 per share implies 7.69% upside potential.
