Ford stock – like most – has faced its fair share of ups and downs in recent years, surging for a while based on the automaker’s heavy investments in electrification, which was once seen by investors as a wise move. However, a lull in demand has quickly turned those same folks into bears rather than bulls, including Morgan Stanley – which named Ford stock as one of its top picks in early 2024, only to downgrade it recently based on fears that Chinese automakers will have a massive impact on The Blue Oval’s global business. However, another investment firm doesn’t quite feel the same way.
That firm is Goldman Sachs, according to Investing.com, which has upgraded its outlook on Ford stock from Buy from Neutral, a decision that stems from the company’s strong Ford Pro commercial business. Analysts believe that Ford Pro’s software and physical services will account for 20 percent of the commercial division’s EBIT by 2026, pointing to the fact that paid software subscriptions have been growing at a rate of between 35-40 percent each year. Goldman noted that it expects Ford Pro “to continue to grow (aided by improved offerings such as in fleet services and ADAS),” adding that Ford is targeting $1 billion in software revenue by 2025.
As for potential threats from China, Goldman Sachs added that it believes the automaker’s recent cost-cutting measures will help it mitigate those impacts, along with suppressed demand for all-electric vehicles in the short term. As such, it sees a 23 percent upside on its new 12-month price target of $13, with Ford shares currently trading at five times Goldman Sachs’ next twelve months’ (NTM) EPS estimates.
Ford CEO Jim Farley has long touted the strength of the company’s dedicated commercial unit, which has posted healthy profits since it launched a few years ago. Aside from showing more of an interest in EVs, Farley has also warned investors that they should be paying more attention to that part of the company’s business, too.
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Wall Street has no idea what it’s doing. Dockworker strike looming, Dow hits a new high. ?????
Wallstreet is laughing at the unfounded Adam Jonas ‘China fears’ downgrade while paying attention to the data-driven (Ford Pro Revenue) Goldman Sachs upgrade.