On Wednesday, CFRA maintained its Hold rating and $14.00 stock price target for Ford Motor Company (NYSE:F). The firm's target is based on a projected 2025 price-to-earnings (P/E) ratio of 7.6x, which represents a discount compared to historical averages. The earnings per share (EPS) estimates for Ford remain unchanged at $1.85 for both 2024 and 2025.
Ford recently reported its second-quarter U.S. auto sales figures, which showed a slight year-over-year increase of 0.8% with 536,050 units sold. This performance aligns with the average U.S. sales growth of 1% for the quarter.
Notably, Ford experienced significant growth in its hybrid and electric vehicle (EV) segments. The company's hybrid sales surged by 56% year-over-year to 53,822 units in the second quarter, largely driven by the popularity of the Maverick hybrid. Moreover, Ford's EV sales increased by 61% to 23,957 units.
Despite these gains in hybrid and EV sales, sales of Ford's internal combustion engine (ICE (NYSE:ICE)) vehicles declined by 5.0% year-over-year. CFRA's Hold rating on Ford reflects the absence of significant market catalysts and broader industry challenges.
U.S. automakers, including Ford, are navigating difficult comparative periods and are expected to face headwinds from higher interest rates and substantial inventories, which could impact top-line growth. Moreover, the new labor contract with the United Auto Workers (UAW) is likely to exert pressure on profit margins for the Detroit Three.
While Ford has achieved more commercial success with its hybrids and EVs compared to competitors such as General Motors (NYSE:GM), CFRA views Ford's current market valuation as fair and reflective of these conditions. The firm has not identified any immediate factors that would alter its outlook on Ford's stock at this time.
In other recent news, Ford Motor Company reported a slight 1% increase in its Q2 vehicle sales, amidst the fallout from a cyberattack on CDK Global (NASDAQ:CDK) Inc. This comes as the company plans to introduce a profitable electric vehicle (EV) with a price tag of $30,000 by late 2026, signaling a strategic shift towards electric mobility.
Meanwhile, the company is facing potential impacts from the upcoming U.S. presidential election, with analysts suggesting that Trump's tariff policies could favor domestic manufacturers like Ford.
In legal developments, a coalition of 26 state attorneys general has filed a lawsuit against the Biden administration's recently established vehicle fuel economy regulations, which could impact automakers like Ford.
Furthermore, Bank of America (NYSE:BAC) Securities analyst John Murphy recently advised legacy U.S. automakers, including Ford, to withdraw from the Chinese market to conserve resources during the transition to EVs. These are among the recent developments that could shape Ford's future business trajectory.
InvestingPro Insights
InvestingPro data highlights Ford Motor Company's (NYSE:F) current market dynamics with a market capitalization of $51.3 billion and a P/E ratio that stands at 13.13. Notably, the adjusted P/E ratio for the last twelve months as of Q1 2024 is even lower at 9.03, indicating potential undervaluation relative to near-term earnings growth.
Ford's dividend yield as of the most recent data is an appealing 6.06%, which is particularly significant for income-focused investors considering that the company has maintained dividend payments for 13 consecutive years.
An InvestingPro Tip suggests that Ford is a prominent player in the Automobiles industry, which aligns with the reported growth in hybrid and electric vehicle sales, underscoring the company's competitive position in these burgeoning segments. Moreover, with analysts predicting profitability for the current year and a track record of profitability over the last twelve months, Ford's financial health appears robust.
For investors seeking a deeper analysis and additional insights, there are more InvestingPro Tips available, which could offer further guidance on Ford's stock performance and valuation. To explore these insights, visit https://www.investing.com/pro/F. And remember, using the coupon code PRONEWS24 can get you up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to exclusive data and tips to inform your investment decisions.
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