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Ford stock gets downgrade as analysts say it’s time to ‘wait and see’

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Ford Motor Co. stock got a downgrade from analysts at Tudor Pickering Holt, who said Wednesday they are taking a “wait and see” approach toward the auto maker until investor events later in the year.

TPH analysts lowered their rating on Ford stock
from buy to hold, saying they were “looking forward to incremental transparency at March and May events, but moving to sidelines and awaiting execution to become more constructive.”

Ford earlier in February reported mixed fourth-quarter results and a $2 billion loss for 2022, with Chief Executive Jim Farley blaming it on “deeply entrenched” operational shortcomings. Another blow came on Tuesday as the auto maker said it temporarily halted production and delivery of its Lightning pickup truck due to a battery problem.

“We’ve come away from earnings and recent operational updates with an incrementally negative outlook over the near-term,” the analysts said.

Ford scheduled a March 23 financial reporting “teach in” event and a May 22 capital markets day. The TPH analysts said they hope the March event “will illuminate … the margin disparity between (internal-combustion vehicles) and (electric vehicles),” with more questions answered plus a likely Ford’s 2023 strategy presentation in the May event.

Ford’s recent misses “will merit a wait-and-see approach from investors until execution becomes as reliable as it was with Ford’s early success in its first-mover OEM push into electrification,” the analysts said.

There’s upside for the shares in the longer term, “especially if profitability turns the corner as planned in 2025-2026” and as second-generation EVs are released and federal incentives kick in. In the near term, however, “we see better risk-reward elsewhere in the OEM space,” the analysts said, without specifically mentioning other auto makers.

Shares of Ford have lost 30% in the past 12 months, compared with a retreat of 8% for the S&P 500 index
in the same period.

Credit: marketwatch.com

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