Ford stock has experienced its fair share of ups and downs over the past few years – which is true of most – largely due to many uncertainties facing the future of the automotive industry as a whole. Aside from experiencing a multitude of problems stemming from the pandemic, Ford and other automakers are now dealing with slower-than-expected growth in terms of EV demand, as well as threats from Chinese automakers and potential ramifications from the upcoming U.S. presidential election. Regardless, investment firm Morgan Stanley named Ford stock as one of its “top picks” in early 2024 – ranking it higher than Tesla – but now, it’s become a bit more bearish.
According to investing.com, Morgan Stanley has revised its outlook for the entire automotive industry in the U.S. based on swelling inventory levels, high prices, and increasing pressure from Chinese competitors. Specifically, the investment firm pointed to the fact that Chinese automakers are building around nine million more vehicles than domestic customers are purchasing, which puts pressure on other markets. “Even if these units don’t end up directly on U.S. shores, the ‘fungibility’ of lost share and profit by key U.S. players adds pressure here at home,” Morgan Stanley analysts wrote in a recent note.
Those same analysts proceeded to downgrade GM, Rivian, and Ford stock from Equal-weight to Underweight, and lowered Ford’s price target from $16 to $12. “Our downgrades to F and GM are underpinned by our expectation for greater share loss through end of decade, price/mix headwinds, and China, regulatory compliance, and EV/AV/ROW/Other risk which can impact profitability driving lower normalized earnings and valuation,” analysts noted.
Ford is certainly aware of the threats that China poses to its global business, with both CEO Jim Farley and Model e COO Marin Gjaja expressing concerns over vehicles produced in that country on multiple occasions as of late. In fact, Farley went so far as to say that the company is betting everything it has on the automaker’s skunkworks team that’s currently developing a low-cost EV platform to do battle with its Chinese competition.
Comments
In February, Morgan Stanley said Ford was one of their top stock picks for the year. Do they even know what they are talking about? China and their auto industry was around then as well.
I agree….very true….that why i dont trust agencys like these….infact Ford rethinking ev stragedy is a good thing….Ford main concern is not China….its there quaility control they need to fix..