Ford's Segmental Restructuring Gets An Analyst Thumbs Up - Ford Motor (NYSE:F)

Benchmark analyst Michael P. Ward reiterates a Buy rating on Ford Motor Co F with a $19.00 price target.
Ford disclosed realigned segment reporting, breaking out performance for three auto segments, moving away from regional metrics that have been in place for decades.
New segments include Ford Blue (global ICE and hybrid vehicles), Ford Model e (electric vehicles), and Ford Pro (commercial vehicles).
As expected, Ford Blue and Ford Pro have been the primary profit drivers. In 2022, Ford Blue accounted for 96% of automotive revenue and generated margins at the EBIT level of 7.2% and 6.6%, respectively. By Ward's estimates, combined revenue from the two segments will likely decline to 85% in 2024.
Ford Model e (electric vehicles) generated $5.3 billion in revenue and reported an EBIT loss of $(2.1) billion. By Ward's estimates, the loss is more than accounted for by the above-normalized Engineering and R&D spending to position the company to gain a share in the global BEV market.
In 2022, Engineering R&D spending at Ford totaled $7.8 billion, and up to one-half could have been targeted toward electric vehicles and developing technologies.
The company expects EV capacity to reach 2.0 million units by 2026 and EBIT margin to reach 8%, suggesting revenue of $100 billion and income of $8 billion.
Ford reiterated 2023 guidance for adjusted EBIT of $9-$11 billion. Ward's 2023 EPS estimate of $1.65 and 2024 estimate of $1.80 are unchanged.
Ford has reduced its breakeven level in North America by 50% since 2008, new products have positioned the company to benefit from a global recovery in volume, and Ford's balance sheet is more vital than ever heading into an upturn.
Price Action: F shares traded lower by 0.31% at $11.39 on the last check Friday.

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