On Friday, CFRA analyst Garrett Nelson revised the 12-month price target for Ford (NYSE:F) stock to $10.00, down from the previous $11.00, while maintaining a Hold rating on the shares. Currently trading at $9.86, near its 52-week low of $9.49, Ford's stock appears slightly overvalued according to InvestingPro Fair Value metrics.
The adjustment reflects a price-to-earnings (P/E) ratio of 5.6x for the year 2025, which Nelson considers a warranted discount compared to historical averages, though the current P/E stands at 11.13x.
Nelson has also updated the earnings per share (EPS) estimate for 2024, raising it by $0.03 to $1.83, and has left the 2025 EPS forecast unchanged at $1.80. The revision follows Ford's announcement of its fourth-quarter U.S. automobile sales, which totaled 530,660 units, marking an 8.8% increase year-over-year. This performance surpassed both the consensus estimate of around 519,800 units and Cox Automotive's projected 5.9% rise in Q4 U.S. new vehicle sales. The company's trailing twelve-month revenue stands at $182.74 billion, with a modest growth rate of 4.89%.
Ford's sales growth was particularly notable in the hybrid and electric vehicles (EVs) segments. Hybrid sales surged 26% year-over-year to 47,082 units in the fourth quarter, while EV sales climbed 16% to 30,176 units. Sales of Ford's internal combustion engine (ICE (NYSE:ICE)) vehicles also showed robust growth, up 6.8% year-over-year, accounting for over 85% of the company's sales volume for the quarter.
Despite the strong sales figures, Nelson anticipates several challenges for Ford as it approaches 2025. These include high inventory levels, weakened consumer demand due to sustained high prices for new vehicles and interest rates, and the potential phase-out of the federal EV tax credit. Nelson also expressed a critical view of Ford's management execution, suggesting it has been less than impressive.
While the company maintains an attractive 8.08% dividend yield, InvestingPro analysis reveals concerning metrics, including weak gross profit margins of 7.68%. For deeper insights into Ford's financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, covering over 1,400 top US stocks.
In other recent news, Ford Motor is set to appoint a new head of quality as part of the company's ongoing efforts to improve its record on recalls and decrease warranty costs. This change, expected to be implemented early next year, comes amid a shift in roles within the company to enhance efficiency and customer satisfaction. Meanwhile, Bernstein has shown positivity towards Ford and General Motors (NYSE:GM) shares, noting their strong performance in the fourth quarter, despite challenges faced by competitor Stellantis (NYSE:STLA).
However, Ford Motor Company (NYSE:F)'s stock was downgraded by Jefferies due to concerns over inventory and strategic decisions that could impact financial stability. The firm also highlighted Ford's structural cost deficit and a cumulative gap of $8.5 billion between warranty and quality provisions and actual cash outflows since 2020.
In terms of performance, Ford's Mustang GTD set a record by completing a Nürburgring lap in under seven minutes, marking a significant milestone for the company. However, potential implications for Ford have been noted due to the incoming Trump administration's possible cancellation of the United States Postal Service's electric mail truck contract.
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