Piper Jaffray Downgrades Ford, Says Autonomous Efforts Won't Drive Fundamental Innovation

Ford Motor Company F lost an advocate Tuesday as a two-year bull confessed few upside catalysts.

The Rating

Piper Jaffray analysts Alexander Potter and Winnie Dong downgraded Ford to Neutral and decreased their price target from $14 to $12.

The Thesis

While Ford’s experience in fleet production positions it to pioneer the autonomous mobility market, a number of distractions and other priorities are seen to hinder trailblazing efforts.

“Ford's pragmatism might pay off — but only if auto market disruption advances slowly,” Potter and Dong wrote in a note.

At the same time, despite Ford’s efforts to adjust its product portfolio and improve global deliveries, Piper Jaffray doesn't expect margins to improve enough to value Ford above peers.

“We appreciate the focus on ‘fitness,’ as well as Ford's newfound willingness to cull less profitable platforms,” the analysts wrote. “But with U.S. vehicle sales slowly eroding, we think investors are looking for more fundamental changes from Ford — and from automotive companies in general.”

They identify no opportunities for upside but note that Ford’s relatively low valuation and 7-percent yield protect it from meaningful downside.

Price Action

At time of publication, Ford was trading around $11.24.

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