Ford Motor Company (NYSE:F) shares have had a nice run-up since hitting a double-bottom in early September. Wary of the pricier valuation, an analyst at Jefferies chose to move to the sidelines.

The Ford Analyst: Philippe Houchois downgraded Ford from Buy to Hold and increased the price target from $20 to $25.

This comes on the heels of a downgrade by RBC Capital Markets last week.

The Ford Thesis: Ford has replaced, revived or re-invented all key product franchises, leapfrogging early EV movers in the U.S. and Europe, Houchois said in a note. The company's "Global Redesign" has closed most of the gap with General Motors Corporation's (NYSE:GM) cost base and retained a reduced but still solid global exposure.

Balance sheet repair happened faster than Jefferies anticipated, with a bonus from the non-core stake in Rivian Automotive, Inc. (NASDAQ:RIVN). Ford Credit appears strong with low-end leverage despite generous distribution, he added.

Related Link: Ford Has Sights Set On Eventually Toppling Tesla As The No. 1 EV Maker

"We are confident about Ford growing earnings this year both in the US and abroad with initial adj EBIT guidance a range of $11.5-12.5bn range after posting $10.4bn in 2021," Houchois wrote in the note.

Product contribution, volume and efficiency can offset an estimated $4 billion cost headwind including materials, the analyst said.

Along with strong earnings and a repaired balance sheet, the shares have also rerated on recovered earnings that now approach cyclical highs, Houchois said. All that leaves limited scope for positive surprises although the stake in non-core Rivian, expected IPO of Argo AI and the return of dividends provide strong support.

F Price Action: Ford shares traded around $22.51 at publication time.