Jefferies Raises Ford Price Target to $14.50
Jefferies analyst Philippe Houchois raised the price target on Ford (NYSE: F) to $14.50 (from $13.50) while maintaining a Hold rating.
“We met CFO Sherry House and Team in Dearborn last week for test-drives and wide-ranging discussions on Autos and Batteries. Management is clearly keen to shift the narrative to capital allocation.
Novelis may still make or break the 2026 guidance but should eventually normalize, while BESS may be more than priced-in for now.
We move auto numbers towards the upper end of guide range driven by Blue. BESS could help model e starting 2029. We add $1 to $14.5 PT.
Key discussion points – • Capital allocation with more disciplined spending on vehicles, from stricter program reviews to continued focus on transformational UEV platform and of course Battery storage. • Universal EV platform (UEV) seen as existential – Launch in H2 2027 and critical to Ford’s long-term success in terms of EV powertrain, new suppliers and capital efficient manufacturing to ensure profitable models at prices from $30k. • Fixing Novelis – Key variable that will make or break guidance.
Production starts normalising in Q2 but full impact on inventory may carry into 2027.
The guided $1.5-2.0bn incremental costs linked to Novelis recovery ($0.3bn in Q1) could run below/above depending on volume, which F sees no need to accelerate as long as mix compensates. • Warranty – Q1 saw the first tailwind in years (Exhibit 1), incl lower cumulative potential cash liability.
Field Service Actions remain a risk while some cash costs delayed until the term of the lease. • Europe profitability dependent on Pro, which in turn relies on the general dealer network.
Consistent with better capital allocation, Ford is focusing on partnerships, with Renault effectively replacing VW as strategic partner in both commercial and personal vehicles. • BESS – CATL becomes Ford’s critical partner with Marshall, MI sized for 20Gwh, mostly dedicated to Autos (UEV) and up to 20GWh in Kentucky dedicated to Utilities.
In both facilities, CATL provides initial equipment specs, staff training and help in sourcing US approved materials, altogether securing the $45/Kwh production credit for Ford.
Association with CATL critical edge for Ford and direct market opportunities as CATL’s access to the US market gets more limited.
Autos and BESS Estimates – No visible impact on demand from oil price, with mgmt highlighting stable affordabilty for Ford’s customers. Q1 beat not fully reflected in updated guidance.
Based on the Novelis discussion, we see low risk of Ford exceeding its recovery related cost guide.
We raise adj EBIT 9% to $9.5bn driven by Blue +17% to $4.9bn and 4.7% margin (+60bps) and FCF to $1.2bn still assuming $5bn of supplier compensation.
First look at BESS, assuming gradual roll out of 5+2Gwh (utility/retail) by 2028 and 15+4Gwh by 2030, pricing from Tesla and BNEF and gross margin going from 10% to 30%, +ve contribution would start in 2029, with revenue ~$4bn and EPS $0.14 in 2030E ($5.2bn $0.25 assuming 25Gwh and 35% GM).”
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