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Analysts Cautiously Optimistic On Ford CEO Shakeup

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Analysts Cautiously Optimistic On Ford CEO Shakeup
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Deutsche Bank Securities analysts said they are cautiously optimistic about the implication of the management changes, including the CEO shakeup, the company announced earlier this week.

Ford Motor Company (NYSE: F) announced the ouster of CEO Mark Fields, replacing him with Jim Hackett, who earlier served as the chairman of its mobility unit. Additionally, Jim Farley, executive vice president of Ford Europe, was appointed as EVP of Global Markets and Joe Hinrichs, EVP of Ford North America, was appointed as EVP of Global Operations.

Surprising Decision

Analysts Rod Lache, Mike Levin and Robert Salmon said they were surprised at the announcements, as the company had been suggesting satisfaction with Field's performance. However, the analysts noted that the contentment did not extend to the company's equity or the board.

The cautious mood of the analysts over the management changes is attributable to the limited visibility into how effective Hackett will be as a CEO, given that his role has thus far been confined to mobility and did not deal with broader operations and strategy.

However, Deutsche Bank is of the view that the board does appreciate potential threats but are placing a premium on reinvigorating its transformation through changes in leadership.

Steps In Right Direction

The firm noted that Hackett addressed issues that soothed Street concerns, with the issues including the need for a sharper vision for the future, changing processes to aid complex strategic decisions and increased focus on attractive returns for every initiative.

The firm believes all these would be steps in the right direction, and over time, it believes these could alter the way the company is perceived externally and internally. The firm also expressed encouragement at the appointment of Farley and Hinrichs, as it is of the view that both are highly talented and particularly well suited for their respective strategic and operational roles.

"And we continue to believe that the clearest path for value creation would involve spinoffs (which we have suggested for General Motors Company (NYSE: GM), Lear Corporation (NYSE: LEA), rather than wholesale transformations. But we nonetheless view today's developments as positive," the firm concluded.

Deutsche Bank has a Hold rating and $14 price target for shares of Ford.

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Latest Ratings for F

DateFirmActionFromTo
Aug 2017NomuraDowngradesBuyNeutral
Jun 2017GuggenheimInitiates Coverage OnNeutral
Feb 2017JefferiesUpgradesUnderperformHold

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