On Wednesday, CFRA made adjustments to the financial outlook for Ford Motor Company (NYSE:F), increasing the stock price target from $13.00 to $14.00 while keeping a Hold rating on the stock. The decision follows Ford's announcement of first-quarter U.S. auto sales, which showed a 6.8% year-over-year increase with 508,083 units sold, surpassing expectations and outpacing the average U.S. sales growth of 5.5%.
The upward revision in the price target is anchored to a 2025 price-to-earnings ratio of 7.6 times, which reflects a discount compared to historical averages. Additionally, CFRA has adjusted its 2024 earnings per share (EPS) estimate for Ford to $1.85, up from $1.80, while maintaining the 2025 EPS forecast at $1.85.
Ford's performance in the first quarter was particularly strong in the hybrid vehicle segment, where sales soared by 42% year-over-year. This surge was led by the Maverick hybrid, which saw an impressive 77% increase in sales. Electric vehicle (EV) sales for Ford also showed significant growth, with an 86% year-over-year rise to 20,223 units.
The automaker's sales growth in the U.S. stood out even more when compared to its main competitor, General Motors (NYSE:GM), which experienced a 1.5% decline in volumes over the same period. Still, CFRA pointed out potential headwinds for Ford and its Detroit peers, noting that the upcoming comparison periods would be more challenging and labor costs are expected to rise due to the new United Auto Workers (UAW) labor contract.
Despite the positive sales figures, CFRA cautions that the growing inventories could lead to sustained pressure on new vehicle prices and an uptick in incentives. The Hold rating on Ford's shares is maintained by CFRA due to considerations of valuation.
InvestingPro Insights
Following CFRA's recent update on Ford Motor Company's financial outlook, InvestingPro data provides additional insights into the company's current market position. With a market capitalization of $54.34 billion and a trailing twelve months price-to-earnings (P/E) ratio adjusted for Q4 2023 at 8.78, Ford shows signs of being valued attractively compared to the industry average.
The company's revenue growth for the last twelve months as of Q4 2023 stands at 11.47%, indicating a solid performance in sales.
InvestingPro Tips highlight that Ford pays a significant dividend to shareholders, with a current yield of 5.87%, and has maintained dividend payments for 13 consecutive years, showcasing a commitment to returning value to investors. Moreover, the company is recognized as a prominent player in the Automobiles industry and has delivered a strong return over the last three months, with a total return of 16.47%.
For readers looking to delve deeper into Ford's financials and gain more strategic insights, InvestingPro offers numerous additional tips. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover how these insights can help inform your investment decisions.
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