Morgan Stanley Flips To Hold On Ford; Cites ‘Substantial Headwinds’

Morgan Stanley downgraded Ford Motor Company to Hold from Buy and maintained a price target of $9 (0.88% downside potential), citing several headwinds.

Morgan Stanley analyst Adam Jonas believes that Ford’s strategy related to electric vehicles (EV) remains unclear. Jonas also thinks that the year 2021 may prove to be critical for the company and it might face “substantial headwinds.”

In a note to investors, Jonas said that Ford Motor’s (F) “business remains saddled in Europe (which we value at negative $9bn) and is sub-scale in China vs. other major OEMs [original equipment manufacturer].” He noted, “We believe it can ultimately transition to EVs and can leverage strong fleet/commercial positions (F-150, Transit van) but faces substantial headwinds on high margin ICE products that face de-adoption.”

“New leadership (new CEO, new CFO and other newly installed positions) gives the company an opportunity to move from restructuring mode/defense to investment/offense,” Jonas added. However, he also believes that the company would remain “challenged by structural issues in key international markets such as Europe and S. America where we see long-term returns as a combined negative.” (See F stock analysis on TipRanks).

Earlier, Ford said that it is planning to sell 100,000 vehicles and trucks equipped with its new hands-free driving technology in the first year of the feature launch. The company’s chief product platform and operations officer, Hau Thai-Tang, said, “Active Drive Assist can help improve the driving experience while ensuring people remain aware and fully in control, all for a price unmatched by our competitors – a commitment to affordable innovations that has driven us since Henry Ford put the world on wheels.”

Currently, the Street is sidelined on the stock. The Hold analyst consensus is based on 10 Holds and 3 Buys. The average price target stands at $9.15 and implies that the shares are fully priced at current levels. Shares have declined by 2.4% year-to-date.

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