Ford downgraded at Bernstein with 'warning signs ahead'

Investing.com -- Bernstein downgraded Ford Motor Co . (NYSE:F ) from Outperform to Market-Perform on Thursday, setting a lower price target of $11, down from $15 per share, due to anticipated financial headwinds and competitive pressures.

Despite mixed results in Ford's third-quarter earnings, Bernstein analysts pointed to "significant pricing and free cash flow (FCF) headwinds in 1H/25" and warned that any potential improvement in the second half of the year or 2026 hinges on decisive management actions.

According to the firm, one major challenge for Ford is defending its flagship F-150 truck in the face of slowing demand and competitive pricing pressures.

Bernstein states that the "sluggish consumer sentiment and more aggressive pricing from competitors" mean Ford will likely have to increase discounts to retain market share, a move that could strain earnings and FCF further.

Ford's internal Blue segment, which oversees its traditional combustion-engine business, also faces challenges, says Bernstein.

They highlighted the need for a substantial cost restructuring within this segment to mitigate the impact of pricing pressures and scale back inefficiencies.

"Management should act soon and launch a full cost restructuring program," the analysts noted, suggesting this could unlock improvements by 2026.

Ford's electric vehicle (EV) strategy, meanwhile, is still under scrutiny. The firm projects continued losses in the EV segment through 2025 and 2026, albeit with some progress in cost reduction.

"Meaningful improvement will only be delivered by an improved platform and volume in the US," Bernstein stated, calling for an updated EV strategy from Ford management by early 2025 to address these concerns.

Bernstein lowered its 2025 adjusted EPS forecast by 21% to $1.71 and applied a reduced multiple, culminating in its revised $11 price target.

Source: Investing.com