Wall Street sees a bumpy road ahead for Ford in 2023.
Courtesy of Ford
Wall Street sounds disappointed with fourth-quarter results from
Ford Motor.
One even downgraded the stock to Sell after the report. Analysts believe things aren’t improving fast enough at the 119-year old auto maker, putting its 2023 goals at risk.
Ford (ticker: F) reported quarterly operating profit of $2.6 billion, which missed Wall Street estimates by about $800 million. Operating profit guidance for 2023, issued Thursday, came in at about $10 billion, in-line with what analysts were projecting.
Investors weren’t impressed. Ford stock was down 6.6% in premarket trading Friday.
S&P 500
and
Dow Jones Industrial Average
futures were off 0.7% and 0.2% respectively.
Wall Street has some reservations about the report too. Deutsche Bank analyst Emmanuel Rosner downgraded Ford stock on Friday to Sell from Hold. His price target went to $11 from $13 a share. Rosner called it a large miss and isn’t sure Ford can hit its 2023 guidance.
Ford believes pricing will be flat in 2023 and volume will be up a little. Ford also plans to improve costs by $3 billion in 2023, relative to 2022. Those assumptions looked aggressive to Rosner.
Daiwa analyst Jairam Nathan rated Ford stock at Sell coming into the earnings report. He maintained his rating and $12 share price target after Ford’s update.
Nathan noted in a report that Ford missed its fourth quarter and 2022 operating profit guidance because of weaker-than-expected pricing as well as persistent cost headwinds. He questioned whether Ford could hit its 2023 operating profit guidance “which is only slightly below the $10.4 billion reported in 2022.”
Benchmark analyst Mike Ward was more bullish than the other two analysts, rating Ford shares at Buy. He did, however, cut his price target for Ford stock after earnings to $19 a share from $21.
“Ford seems to find a way to dump a bucket of cold water on the auto stocks when the group begins to gain momentum,” wrote Ward in a report Friday. But he noted that free cash flow generation is expected to continue at “historically high levels,” which is a positive for the stock.
Ford projects $6 billion in free cash flow for 2023, down from about $9 billion generated in 2022.
Ford’s annual free cash flow averaged roughly $3 billion in the few years leading up to the pandemic. It has averaged roughly $6 billion a year since then.
Overall, 41% of analysts covering Ford stock rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. The downgrade to Sell doesn’t change the Buy-rating ratio, but it changes the Sell-rating ratio. Now, about 18% of analysts covering Ford rate shares at Sell. The average Sell-rating ratio for a stock in the S&P 500 is less than 10%.
The average analyst price target is about $14 a share. The average price target is down about 50 cents after earnings.
Coming into Friday trading, Ford stock has risen 23% this year and about 8% over the past three months.
Write to Al Root at allen.root@dowjones.com
Credit: marketwatch.com