According to a Jefferies Analyst, Ford Motor Co. (NYSE:F) may find’mild relief’ next year as Donald Trump relaxes the emission regulations.
Philippe Houchois expects that 2025 will be another year of weakness for the automaker legacy due to its inventory surplus.
Ford’s stock was downgraded today by the investment firm to “underperform”. It also lowered their price target from $9.00 to $9.00, indicating a further 13% possible decline.
Ford shares are significantly behind its competitors
Philippe Houchois advises avoiding Ford stocks next year, as the “de-stocking” has led to an inventory overhang of 96 days despite solid US sales of +15 (+4% YTD)”.
Stellantis, on the other hand, has a number of only 18 days.
Jefferies has a dovish outlook on Ford shares, months after Ford lowered their full-year adjusted earnings before taxes and interest (EBIT), from as high as $12 billion to around $10 billion.
The shares of this car maker, on the other hand, have a rather attractive dividend yield at 5.77%, which makes them more appealing to income investors.
What else could affect the F-share price?
Jefferies pulled out of Ford Motors today due to a number of challenges it is facing, such as resizing potential in Europe.
The gap between the warranty provisions of $F and its cash outflows has grown significantly over recent years.
The investment firm informed clients on Monday that “the balance sheet is robust, but potential claims from warranty and restructuring leave little cash to shareholders.”
Ford’s latest quarter was a success despite its difficulties.
Automotive revenue of $43,07 billion was reported at 49 cents per share, compared to the expected 47 cents for $41.88 billion.
Ford’s stock price is still down by close to 30 percent compared with its July high for the year.
Ford shares no longer deserve a premium
Philippe Houchois’s Monday bearish position on Ford stock was influenced by a number of concerns, including the valuation.
The Jefferies analyst believes that investors will continue to punish the automaker in the future for their continued struggle. $F still trades at a higher price than General Motors.
Ford’s stock is no longer worth the premium.
The current price of $F is about 6.2x its projected earnings in 2025.
In 2024, adjusted for inflation, Detroit’s automaker, which was fined $165,000,000, will still see a free cash flow between $7.5 and $8.5 billion.
F-shares are currently trading at $19. This represents an approximate 85% increase from the current price.
The post Ford Stock is heading for more struggles in 2025 might be updated as new information unfolds
This site is for entertainment only. Click here to read more
