Stock Market News – Ford outperforms on the back of analyst upgrade


Andreas Georgiou, XM Investment Research Desk

Ford is outperforming during Wednesday’s trading, leading the list of gainers within the S&P 500. An upgrade in the company’s stock by an investment banking analyst acted as the catalyst behind today’s movement.

Shares of Ford Motor Company jumped after an analyst with Morgan Stanley changed his view on the stock, adopting a bullish perspective on the vehicle maker from the previously held bearish one.  Specifically, the analyst, who is top-rated by Thomson Reuters for recommendations on Ford, revised the company’s stock to “overweight” from the “underweight” he held since 2014. In addition, the analyst upwardly revised the price target maintained on the stock to $15 from $10. This compares to the current price of $11.13, while the median price target assigned on the stock by Wall Street analysts submitting their forecasts to Reuters stands at $12.50 at the moment.

The upgrade was partly attributed to the automaker’s cost-saving and profit repositioning potential, which according to the analyst allows the company to positively surprise the market. Restructuring and exit from certain markets such as Latin America were cited as some of the drivers that could lead to outperformance.

The stock has retreated from the day’s high that saw it rise by 6.1% to touch $11.44, this being a one-and-a-half-month peak. It is currently up by 3.3%. Resistance to further advances might be coming at the moment from the area around the 50- and 200-day moving averages at $11.31 and $11.50 respectively. On the downside, support could come around the $10.60 level that was congested recently, while the $11 handle further above might act as psychological support.

Ford’s latest earnings report for Q4 2017 fell short of analysts’ expectations, with the firm partially attributing the miss to rising commodity prices and unfavorable foreign exchange rates, while adding that it projects higher commodity prices to continue to weigh on its financial results in 2018. The firm’s next earnings report is due on April 25.

Ford is an S&P 500 constituent stock. Year-to-date, the S&P is trading higher by 3.3%. Despite today’s outperformance, Ford continues to trade lower year-to-date, specifically it is down by 9.9%. Rival General Motors is down by 7.0% over the same period. Analysts’ consensus recommendation for Ford’s stock is “hold”, with the corporation’s forward price-to-earnings ratio standing at 6.95 – this compares to the average P/E of 6.05 for Auto & Truck Manufacturers, its peer group.