Jefferies Upgrades Ford to Buy, $17.50 PT
Jefferies analyst Philippe Houchois upgraded Ford (NYSE: F) from Hold to Buy with a price target of $17.50 (from $14.50).
“There is always scope for surprise either way at Ford, but we see Q2 as a low point for volume with post-Novelis production set to normalize up.
With US market conditions healthy, management could raise guidance at Q2.
From Universal Platform to BESS and Europe, Ford is also demonstrating improved capital allocation and addressing old overhangs. We upgrade to Buy ahead of Q2 earnings. PT to $17.5.
Historic valuation gap with GM has normalized.
GM delivering and painting a benign picture of US demand, create a more supportive environment for Ford. We raise FY adj EBIT to $10.3bn, the upper end of the $8.5-10.5bn guided range.
The ~$800m increase in EBIT takes adj FCF to ~$4bn ($1.7bn after suppliers).
Our estimates assume improvement in warranty and minimal impact from potential changes in USMCA given existing footprint and reduced Canada exposure.
Inventory rebuild to carry into 2027 with cash flow supported by earnings, working capital, IEEPA cash and lower supplier EV compensation.
JEFe ~20% above consensus on Blue improving in 2027 vs consensus flat, on slightly reduced EV losses (unchanged) and Blue improving in 2027 vs cons flat.”
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