Over the recent years, the EV industry has grown significantly, and Ford (F) is capitalizing on this trend.
The company’s stock has risen over 15.6% in the last six months and 114.6% over the past year. I maintain a Neutral stance on Ford stock. (See Ford stock charts on TipRanks)
Ford Expands Investments in EV Space
Under the leadership of CEO Jim Farley, the global automaker has been aggressively implementing its EV plan.
Ford and its partner, SK Innovation, announced plans to invest $11.4 billion in the United States to develop an electric F-150 manufacturing facility, and three battery facilities. The company expects to create roughly 11,000 jobs as a result of this investment, with 6,000 in Stanton and 5,000 in Glendale.
The latest announcement follows the company’s pledge to invest more than $30 billion into EVs by 2025.
In response to the above investment, Ford’s North American COO Lisa Drake said, “For us, this is a very transformative point where we are putting our capital in place now in a very big way to lead the transition to EVs.”
Earlier this month, Ford Motor had announced that it is commencing with pre-production of the electric F-150 Lightning truck due to a surge in demand. The Ford F-150 Lightning is a zero-emissions truck with innovative features and technology that is intended to develop over time.
Concern Exists
The emergence of the Delta variant of the coronavirus, as well as chip shortages leading to production cutbacks, remain key worries for all manufacturers, including Ford.
During the Q2 conference call, Ford’s CFO John Lawler said that he sees the “chip issue running this year” and “bleeding into the first part of next year.”
Wall Street’s Take
Ford stock commands a Moderate Buy consensus rating, based on five Buys and three Holds. The average F price target of $16.16 implies 11.2% upside potential to current levels.
This month, Benchmark analyst Michael Ward reiterated a Buy rating on the stock, with a price target of $18 (23.8% upside potential).
Despite the fact that the analyst is concerned about the semiconductor chip scarcity, he believes that “the worst could be over for Ford.” He expects the stock price will rise in the near term due to the company’s strong North American operations, “record performance” at Ford Credit, and strength in its cash-generating capabilities.
Disclosure: On the date of publication, Shalu Saraf had no position in any of the companies discussed in this article.
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