Market Overview

Goldman's Giant Auto Call: Rotating From GM To Ford

Goldman's Giant Auto Call: Rotating From GM To Ford
Related F
A Bad Week For Tesla Motors
Jim Cramer Gives His Opinion On Wal-Mart, Ford Motor And Barclays
5%+ Dividend Yield Portfolio: Trump And The No Good, Very Bad Month (Nov 2016 Review) (Seeking Alpha)
Related GM
A Bad Week For Tesla Motors
Industry Expert Discusses The Future Of 3D Printing: Consumer Products And Energy Efficiency
On The Ground: November IRA Activity W/Extra Options Fun! (Seeking Alpha)

Goldman Sachs announced a major change of heart this week, as a new report by analyst Patrick Archambault detailed the firm’s decision to upgrade Ford Motor Co (NYSE: F) from Neutral to Buy and downgrade General Motors Co (NYSE: GM) from Buy to Neutral. According to the report, growth was the main driver of the rotation decision.

Key Differences

With the benefits of volume, mix and pricing resulting from the launch of its F-150, Ford is now firing on all cylinders. Goldman sees GM, on the other hand, scrambling to compete with Ford on truck incentives. 

China is also a major differentiator between the two companies. Goldman notes that, while Ford has been improving its positioning in China, GM “looks vulnerable” when it comes to its China guidance.

Related Link: Chowdhry: Fitbit IPO Is 'Peak' For Company, Take Profits Now

Growth Projections

Goldman is now projecting compound annual EBITDA growth of 15 percent for Ford through 2017. When compared to the firm’s 5 percent growth projections for GM during that same time, it’s easy to see why Goldman decided now is the time to make the rotation.

Stock Outlook

For Ford, Goldman’s new 2015/2016 earnings estimates are 4 percent and 8 percent above consensus estimates, respectively. The firm's new $19 price target for the stock represents 26 percent upside from current levels.

For GM, Goldman’s 2015 earnings estimates are now 5 percent below consensus estimates, and the firm sees the potential for additional downward estimate revisions as well.

Goldman’s $40 price target represents only 11 percent upside from current levels.

Ford’s stock was trading up about 2.0 percent in early trading on Wednesday following the upgrade. GM’s stock was trading down by more than 2.0 percent on the downgrade news.

Latest Ratings for F

Dec 2016MacquarieInitiates Coverage OnNeutral
Nov 2016BerenbergInitiates Coverage OnSell
Oct 2016Daiwa CapitalUpgradesUnderperformNeutral

View More Analyst Ratings for F
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Short Ideas Upgrades Downgrades Price Target Top Stories Analyst Ratings Best of Benzinga


Related Articles (F + GM)

View Comments and Join the Discussion!