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Ford: Evolving, Yet Miles to Go
Stock Analysis & Ideas

Ford: Evolving, Yet Miles to Go

American automobile manufacturer Ford (F) is taking commendable steps in shifting from internal combustion engines (ICE) vehicles to electric vehicles (EV), to remain relevant in the changing automobile market. Earlier this year, the company upped its investment towards this effort to $30 billion, in order for 40% of its global vehicle volume to become all-electric by 2030.

The Mustang Mach-E is already gaining popularity among consumers. The upcoming lineup of EVs, including the F-150 Lightning Electric truck, Maverick hybrid pickup, and E-Transit also spark optimism.

Yet, Ford is not among the top names that come to our mind when we hear “EV.” Clearly, there are a few important hurdles coming in the way of Ford’s vision, and they deserve our attention.

Website Traffic Trends

Ford’s website displays an online catalog of its portfolio of cars, upcoming cars, important news related to dividends, buybacks, launches, partnerships, etc. So, traffic to its website shows how much interest consumers have in the company and its developments.

Interestingly, TipRanks’ new Website Traffic tool, which sources its data from Semrush (SEMR), gives a fair idea of how many views Ford is getting on its website.

We saw that the visits to the company’s website by unique users decreased 11.9% sequentially in Q3. Moreover, when we compared the quarter-to-date figure with last year’s corresponding period, we saw a 5.27% decline in website visits.

Thus, we don’t see an encouraging trend here in terms of website visits, which strengthens our belief that Ford still has a long way to go when it comes to gaining the top position in the evolving auto industry.

Challenges to Overcome

Ford has several challenges to overcome in the realm of EV. First, the massive spending budget for EVs, green vehicles, and self-driving cars is likely to strain near-term profit levels.

Secondly, the persisting chip shortage hounding the auto industry is unlikely to abate anytime soon. This is expected to remain a challenge that prevents Ford from realizing its full potential for some time. Moreover, high commodity costs and logistical challenges are expected to be an overhang on the company’s performance as a growing EV player.

The rising debt level is another concern. As of September 30, Ford’s automotive long-term debt (long-term debt for the company excluding its financial services unit, Ford Credit) was $23.77 billion, up from $22.63 billion recorded at the end of 2020. This is expected to be a hindrance to pursuing growth-driving initiatives.

Experts Weigh In

On November 11, Morgan Stanley analyst Adam Jonas reiterated a Sell rating on the stock, but raised the price target to $12 from $11.

Wall Street analyst consensus, on the other hand, has a cautiously optimistic stance towards Ford, with a Moderate Buy rating based on 8 Buys, 2 Holds, and 2 Sells. The average Ford price target of $18.08 indicates a downside potential of 8.96%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

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