Proactive Investors - Ford Motor Company (NYSE:F) has been downgraded by UBS analysts from ‘Buy’ to ‘Neutral’ on their view that the stock has more limited upside to 2024 and 2025 estimates than they previously believed.
For 2024, the analysts see earnings before interest and taxes (EBIT) adjusted guidance of $9 billion to $11 million, bracketing the current consensus of $10 billion.
Labor is seen as a $1.5 billion to $2 billion headwind, plus a $1.5 billion headwind in Ford’s Blue division and a $1.7 billion loss from reduced volumes during strikes.
The analysts also see warranty as a $1.7 billion headwind through the third quarter of 2023.
“While Ford is subject to the same industry headwinds as other automakers (pricing, affordability, labor, investment) and is trying to increase their capital efficiency, we believe Ford may have more to reverse versus peers considering execution and quality challenges,” they wrote in a note to clients.
The analysts see the potential for greater earnings upside at US peer General Motors Company (NYSE:NYSE:GM).
“Though we like CEO Farley’s vision and direction for the future of Ford, we believe it could take a number of years for the benefits of those plans to be realized,” they wrote.
The UBS analysts maintained their US$12 price target on the stock noting that this was warranted given the industry is late cycle and the execution risk.
Ford shares traded lower on the downgrade, down 1.7% at US$11.27 on Wednesday morning.