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Ford's Stock Has Best Day In 7 Years After Delivering Results Where It 'Matters Most'

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Ford's Stock Has Best Day In 7 Years After Delivering Results Where It 'Matters Most'

Ford Motor Company (NYSE: F) reported mixed third-quarter results Wednesday, but that didn't stop investors form buying up the stock.

Shares closed higher by 9.9 percent at $8.99. That's the biggest move for the stock since Aug. 9, 2011, when shares jumped about 10 percent from $9.78 to $10.80.

Ford's stock hasn't closed in double-digit territory since Aug. 8, hurt by higher rates and tariffs. Here's what Street analysts are saying after the print.

The Analysts

  • Buckingham Research Group's Joseph Amaturo maintains a Neutral rating on Ford with a price target lowered from $10 to $9.
  • Morgan Stanley's Adam Jonas maintains at Equal-Weight; unchanged $10 price target.
  • Jefferies' Philippe Houchois maintains at Buy; unchanged $13 price target.

Jefferies: Ford Delivered Where It 'Matters Most'

Ford reported multiple encouraging metrics in areas where it "matters most," Houchois said in a note. They include:

  • EBIT 10 percent ahead of consensus estimates.
  • Three-percent revenue growth to $37.7 billion.
  • A slight EPS beat at 27 cents.
  • Strong performance in North America despite negative net pricing, along with higher commodity and warranty costs.
  • A solid contribution from the credit side of the business.

Several poor metrics that Ford reported were anticipated, including weak performance in Europe and a "low point" in China, the analyst said.

Ford impressed in areas where it mattered most against "low and falling" expectations, which warrants a bullish stance on the stock, according to Jefferies.

Buckingham's Concerns Over Cost Cutting

Several aspects of Ford's third-quarter report were a welcome surprise, including an 8.8-percent EBIT margin in the North American business, while the Ford Motor Credit Co. showed a strong profit that prompted a $600-million quarterly dividend from the subsidiary, Amaturo said in a note.

Ford's free cash flow would have been negative $500 million excluding the dividend, which warrants a cautious stance toward the quality of accrual earnings, the analyst said.

Ford didn't offer any specific details regarding its cost-cutting and restructuring initiatives, Amaturo said. The company plans on saving $36 billion over time, but the absence of any new color warrants a cautious stance, he said.

Morgan Stanley: 'Some Relief'

Ford's report offers investors "some relief" and should ease negative sentiment and declining expectations, Jonas said in a note. The results come at a time when Ford continues to create new partnerships, finalize restructuring initiatives and generate new value-enhancing ideas, he said.

The stock's upside reaction Thursday shouldn't come as a surprise, although it should not be considered "the big inflection" point to support continued upside, the analyst said. Ford's balance sheet is "holding together" and the nearly 7-percent dividend yield appears to be safe, Jonas said.

Related Links:

What China Means For Ford And Tesla

7 Reasons Morgan Stanley Pulled Back On Ford

Photo courtesy of Ford.

Latest Ratings for F

DateFirmActionFromTo
Aug 2019UpgradesEqual-WeightOverweight
Jun 2019Initiates Coverage OnOutperform
May 2019UpgradesNeutralBuy

View More Analyst Ratings for F
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