3 Ford Analysts On Dearborn's Q1 Beat, Ongoing Production Disruptions

Ford Motor Company F shares were trading solidly down Thursday after the company reported better-than-expected first-quarter earnings.

Unfortunately, the company also said it will lose half of its production in the second quarter due to the ongoing global chip shortage and a fire at a Ford supplier in Japan.

For the first quarter, Ford reported adjusted EPS of 89 cents on $36.2 billion in revenue. Both numbers beat consensus analyst estimates of 22 cents and $36 billion, respectively. Revenue was up 6% from a year ago.

Related Link: Google Analysts Bullish Following Earnings Beat: 'Well Positioned For Reopening Tailwinds'

Despite the strong top- and bottom-line numbers, Ford shares are dropping on concerns about the negative impacts of the chip shortage.

Ford lost 17% of its first-quarter production and expects to lose 50% of production in the current quarter. The company also burned through $400 million in cash in the first quarter and cut its full-year 2021 operating profit guidance from $7.6 billion to $6 billion.

The stock was down 9.29% at $11.28 at last check.

BofA, Jefferies On Ford's Report: BofA Securities analyst John Murphy said Thursday that Ford’s updated guidance may have confused some investors.

“Specifically, Ford expects 2021 adjusted EBIT of $5.5bn-$6.5bn, including a $2.5bn hit related to the ongoing semiconductor shortage, which is comparable to its prior outlook of $8-9bn that had excluded the impact of the chip shortage,” the analyst said.

Despite the confusion, Murphy said Ford’s operating performance in the first quarter was impressive across the board.

Jefferies analyst Philippe Houchois said Ford is doing well with its internal business while it navigates external disruptions.

“The Q1 good news is that everything under Ford's control turned out materially better with another EBIT surprise at $4.8bn, >3x consensus, thus limiting an expected WC driven cash burn to $400m,” Houchois wrote.

He noted that all of Ford’s key geographical divisions were profitable in the first quarter.

Morgan Stanley Says Ford's Outlook Uncertain: Morgan Stanley analyst Adam Jonas said Ford has too many challenges for investors to know what to expect for the rest of 2021.

“We believe that the potential for re-rating for Ford (and its OEM peers) will come down to execution of the strategy to pivot to BEV development while managing the run-out of the ICE liability,” the analyst said.

He said Ford’s Capital Markets day event in May will be the next major catalyst for the stock.

Ford Ratings, Price Targets

• Bank of America has a Buy rating and lowered the price target from $15 to $14.50.
• Jefferies has a Buy rating and $16 target.
• Morgan Stanley has an Underweight rating and $9 target.

Photo by Dave Parker via Wikimedia.