According to Rosner, Ford "expectedly" reiterated its recently revised 2016 guidance and 2017 outlook, which was "well below published estimates." However, the analyst defended the company's outlook and suggested that a sequential decline in earnings next year is due to large investments in emerging opportunities rather than cyclical pressures.
Rosner added that Ford's management spent most of the presentation discussing its emerging opportunities in electrification, autonomy and mobility.
The analyst highlighted Ford's belief that battery cell costs will decline below $100kWh by 2025, which will result in the auto industry reaching a "tipping point" in 2030 when electric vehicles will outnumber traditional combustion vehicles.
Moreover, Ford continues to believe it will develop a L4 autonomous car internally by 2021 and nine years after that 20 percent of its sales will autonomous vehicles. The company is also optimistic that it can develop an entire ecosystem for autonomous electric fleets.
Bottom line, Rosner stated that while he was expecting a "soft" 2017 outlook, he was surprised that the company attributed its outlook towards major investments while "barely mentioning" any domestic weakness it called out in the second quarter. However, due to the heightened investment cycle, the analyst did cut his 2–17 pre-tax earnings estimate to $9.4 billion from $11.2 billion while simultaneously maintaining an Outperform rating and $13 price target.
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