Analysts at J.P. Morgan on Friday upgraded their rating on Ford Motor Co. stock to their equivalent of buy from hold, saying that “an incoming tide of hot new products” are likely to bring “substantial” volume, mix and pricing benefits.
The new cars on Ford’s slate include a Mustang Mach-E electric crossover, and the highly anticipated Bronco SUV, for which Ford has amassed more than 190,000 reservations, said the J.P. Morgan analysts, led by Ryan Brinkman.
“Most important from a financial perspective, however, will be the all-new F-150, which while a drag in 4Q/1Q amid the changeover to a new version, we expect will become a powerful profit contributor when assembly lines return to full speed by 2Q21,” they said.
The analysts also praised Ford’s new CEO for being “laser focused on improving execution,” a “budding turnaround” in China, and the company’s recent decision to restructure its South American business, which the analysts called a “bold move.”
The analysts are expecting Ford’s fourth-quarter loss to come to 4 cents a share, compared with a FactSet consensus for a quarterly loss of around 7 cents a share. They increased their price target to $14 from $11, implying upside of around 27% over Friday prices.
“Now seems an opportune time to purchase Ford shares, given hot new products in new-for-Ford segments plus the F-150 refresh,” they said.
Ford shares have gained 25% in the past 12 months, compared with gains of around 16% for the S&P in the same period.