Ford has a ‘Ferrari’? The unknown parts of the business get their due.
Shares of Ford Motor Co. rose Wednesday after improved quarterly results as analysts focused on unknown aspects of the business and better-than-expected 2024 guidance, but remained cautiously optimistic about the automaker.
Ford Pro, Ford F,
The division that handles fleet and commercial customers “continues to be a hidden gem within Ford,” UBS analyst Joseph Spak said in a note Wednesday, echoing similar sentiments from several others.
Ford late Tuesday announced earnings before interest and taxes of $8 billion to $9 billion for Ford Pro and $7 billion to $7.5 billion for Ford Blue, which focuses on traditionally powered vehicles. The company forecast another loss from its EV unit, Model E, at $5 billion to $5.5 billion.
Fourth-quarter sales of the Ford Pro were up 11% year-over-year, while Ford Blue was flat and Ford’s Model E sales were up 4%, below consensus.
“Pro continues to stand out as one of the best companies in automotive,” RBC analyst Tom Narayan said in his note.
Ford reported fourth-quarter earnings Tuesday that significantly exceeded Wall Street expectations, called for a “strong” 2024 and unveiled a special dividend. The automaker also revealed that it will launch its next-generation EV to compete with Tesla’s future ‘Model 2’.
Better-than-expected financials have done little to turn Ford bears into Ford bulls, at least for the time being.
Of 24 analysts surveyed by FactSet who cover Ford, 11 gave the stock a hold rating, nine gave it a buy rating, and four gave it a sell rating.
However, in addition to the positive stock price reaction following earnings, upward potential is also expected. “Consensus estimates are likely to rise and confidence in Ford’s execution will also increase,” said Citi analyst Itay Michaeli.
“The Pro is Ford’s ‘Ferrari’ (or the closest thing to it).” But it remains to be seen how long the unit’s funding loss can persist in Ford’s vertically integrated EV strategy, said Morgan Stanley’s Adam Jonas.
Ford’s stock price has fallen about 7% over the past 12 months, compared with a rise of about 20% for the S&P 500 index SPX..
