Ford stock has climbed 95% over the past year.
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Ford Motor stock has been been on a tear, cruising by most analyst price targets. That leaves analysts in an interesting position, needing to either adjust price targets or downgrade the stock. It’s time for Wall Street to fish or cut bait.
After weighing the stock valuation against momentum Ford (ticker: F) has achieved in its electric-vehicle programs, Jefferies analyst Philippe Houchois decided to cut bait. He downgraded Ford stock to Hold from Buy on Wednesday. His price target, however, rose to $25 a share from $20.
Shares “are in good shape and in good hands,” wrote the analyst. Houchois appears to like the direction the company is headed under the leadership of Jim Farley. Still, a lot of good news is reflected in the current stock price.
Coming into Thursday trading, Ford stock was up more than 100% over the past year. Shares look like they will open down about 2% Thursday after falling nearly 8% Wednesday. S&P 500 and Dow Jones Industrial Average futures were up about 0.4% and 0.5%, respectively.
Houchois isn’t willing to assign a higher valuation multiple to Ford shares just yet even though the company is making progress on electric vehicles. Ford sold more than 27,000 all-electric Mustang Mach E vehicles in 2021 and the all-electric F-150 begins shipping to customers soon.
Despite EV momentum, Ford stock trades for about 11 times estimated 2022 per-share earnings. The S&P trades at about 21 times. Shares of Tesla (TSLA), the EV leader and a stock Houchois rates Buy, trades for about 100 times estimated 2022 earnings.
Houchois’ Tesla stock price target is $1,400 a share.
Tesla, of course, is growing rapidly. Unit deliveries grew 87% in 2021 and Wall Street projects Tesla deliveries will grow more than 50% in 2022. Ford EV sales are growing too, but the company still has to overcome the issue that, to some extent, an EV sale for Ford will replace the sale of a gasoline-powered vehicle.
With the downgrade, about 46% of analysts covering Ford rate shares Buy. The average Buy-rating ratio for stocks in the S&P is about 58%. More than half of analysts covering the company have target prices below where the stock is trading. The average analyst target price is about $22 a share. Shares closed at $22.45 on Wednesday.
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