DJ Ford Enters the EV Arms Race. Here's What Wall Street Thinks. -- Barrons.com
By Al Root
Ford Motor gave its stock two pushes higher with fourth-quarter results that exceeded Wall Street expectations, plus plans to join its rivals in spending big on electric and autonomous vehicles.
The stock was up about 3% in premarket trading, though it later slipped back for a gain of 0.8% to $11.47. The S&P 500 and Dow Jones Industrial Average were both up about 0.4%. Through Friday, Ford share have gained almost 30% year to date.
Deutsche Bank analyst Emmanuel Rosner took his target for Ford's (ticker: F) stock price to $12 from $11. He kept a Hold rating on the stock, though he said he was encouraged by the financial results and the company's increasing commitment to EVs.
Ford announced $15 billion in spending on EVs between 2021 and 2025 as well as another $5 billion for autonomous-vehicle technologies. The $20 billion compares roughly with the $27 billion announced by General Motors (GM) recently for both electric and AV development. Adjusted for size, Ford's commitment to those areas matches those of almost any other auto maker.
The total spending on EV and AV development Ford has announced totals $29 billion, but that figure includes money already invested.
"This move can support an improving narrative," for Ford stock, RBC analyst Joe Spak said of the spending plan in a research note. He still rates the shares at Hold, though he lifted his target for the share price by 30%, to $13 from $10. Spak wants to be convinced that profit margins will keep expanding before upgrading the stock.
Ford told investors to expect about $7.6 billion in 2021 operating profit. That is up from 2019 levels -- a pre-pandemic year -- and implies profit margins of roughly 5%. Spak wants to see corporate-wide margins reach 8%.
Benchmark analyst Mike Ward also raised his Ford price target, to $14 from $13. He, however, rates shares at Buy. Ward says 2021 will be a good year for the company as it introduces new products and as car dealers replenish inventories reduced as Covid-19 hit production.
Bank of America analyst John Murphy has the same $14 target as Ward, after increasing it from $12. He also rates Ford Buy, calling Ford's quarter very strong and Ford's 2021 guidance conservative.
Analysts, for the most part, praised the quarter. Goldman Sachs analyst Mark Delaney had a word of caution, though. He too is encouraged by Ford's EV plans, but believes the company might be behind its peers in the EV race. He rate Ford stock at Hold and has an $11 price target.
An EV arms race is under way. Wedbush analyst Dan Ives believes Ford's plans signal the car business is entering what he calls a golden age of EVs.
"A green tidal wave expected in the U.S. under a Biden Administration and China [is] seeing skyrocketing consumer [EV] demand across the board, " wrote Ives in a Thursday report.
He doesn't cover Ford stock, but follows disruptive technologies. He rates Tesla (TSLA) stock at Hold and has a $950 target price for Elon Musk's firm. Tesla stock was at $840.15 on Friday morning, down 1%.
Write to Al Root at allen.root@dowjones.com
(END) Dow Jones Newswires
February 05, 2021 10:21 ET (15:21 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.