Good news and bad news for legacy automaker Ford (F) buffs today, as Ford revealed that the fire at Novelis would indeed have knock-on effects that reduced production on some vehicles. But the news did not hurt Ford stock by much at all. In fact, investors gave shares a nice bump, up nearly 1.5% in Tuesday afternoon’s trading.
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The bad news is that several vehicles will have their production cut as a result of the fire at Novelis. The Expedition and the Navigator are both having production shut down this week, but the shutdown will only last a week, reports note. The clear risk was to the F-150, which is one of Ford’s biggest sellers and biggest aluminum users. Reports noted that up to $1 billion in operating profit would be at risk if Ford lost production on the F-series, but it seems Ford is managing to keep those trucks rolling.
But the good news is that Ford may have found a solution. Automakers, Ford included, regularly schedule downtime throughout the year, and there was some scheduled for later this year anyway. Thus, Ford could simply switch around some downtime and uptime periods to yield a production schedule that accommodated the sudden loss of a whole load of aluminum.
So What?
Meanwhile, Ford seems oddly unconcerned by new developments in China, particularly the rise of the solid-state battery. While this is deeply disturbing to the America First crowd, Ford is taking the development in stride. In fact, Ford has very little interest in solid-state battery technology for any of its upcoming applications.
Despite this, Ford is not ignoring solid-state outright. It recently referred to solid-state battery technology as a “…possible future technology.” For right now, in a market mainly driven by gas-powered vehicles, solid-state batteries just are not of much value. Remember that Ford pared back a deal on lithium just days ago.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 6.46% rally in its share price over the past year, the average F price target of $11.33 per share implies 3.38% downside risk.
