Citigroup's Battle Of The Giants: General Motors Vs. Ford
Michaeli adds that the distinction between the two auto makers could become "critical" if the yen continues to weaken.
General Motors holds a capacity advantage in production of large vehicles that benefit from lower gas prices like SUVs and trucks, according to Michaeli.
The analyst explains that Ford's capacity is constrained in its Chicago plant while General Motors has excess rooms. In addition, General Motors has additional capacity for mid-size pickups at its plant in Wentzville, while Ford has no offering.
Finally, Ford will be constrained for a few months due to the ramp up of its new F-150 truck, according to Michaeli.
Michaeli further notes that General Motors no longer deserves to trade at a discount to Ford. However, the analyst chooses not to value General Motors at a premium to Ford at this time given General Motors' legal cost overhang from recalls.
Shares of Ford were maintained with a Buy rating and a price target lowered to $17 from $18.
Shares of General Motors were maintained with a Buy rating and a price target unchanged at $48.
Shares of Ford and General Motors both opened little changed, trading at $14.04 and $31.17, respectively.
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|Jan 2017||RBC Capital||Upgrades||Sector Perform||Outperform|
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