On Wednesday, Bank of America released its annual Car Wars study of the strength of U.S. automaker product pipelines.
The Analyst: Analyst John Murphy said he was impressed by the recent Ford Motor Company F Capital Markets Day event and sees more upside for the stock in the near future.
“In our view, a higher assumed multiple for Ford is warranted as the company is gaining more credibility and is on the verge of executing something analogous to our Core to Future transition framework, by which it will strengthen core business pillars to fund its future businesses,” Murphy wrote in the note.
Murphy also reiterated his Buy rating for Ford and raised his price target from $14.50 to $17.
Other Auto Stock Picks: In addition to Ford, Murphy said Honda Motor Co Ltd HMC has historically been a market leader in product refreshes and appears well-positioned for the next three years. Honda is on track to refresh nearly its entire product portfolio over the next four years, Murphy said.
Murphy said Toyota Motor Corp TM is another one of his top auto stock picks and has an impressive pipeline of models coming down the line. Murphy said investors should expect Toyota’s replacement rate to start to accelerate significantly starting in model years 2024 and 2025.
See also: How to Buy Ford Stock
Finally, Murphy is bullish on General Motors Company GM despite the company currently having the lowest replacement rate in the auto industry. Murphy said the low replacement rate reflects GM’s unique focus on electric vehicle technology, and the company is planning to introduce nearly 20 new EV models in the U.S. market over the next four model years.
Benzinga’s Take: Tesla Inc TSLA has secured a huge first-mover advantage in the U.S. EV market. However, Tesla will face its first true wave of EV competition from legacy automakers in the next several years, and legacy auto stocks have plenty of room for potential upside based on their discounted valuations.
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