Ford selloff tests Wall Street’s faith in an earnings recovery

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeInvestorFord selloff tests Wall Street’s faith in an earnings recoveryThough the stock has fallen about 30 per cent from its May peak, analysts have raised their average price targetAuthor of the article:Last updated 3 minutes ago Ford shares have closed lower in 14 of the 20 sessions since Labour Day, losing 17 per cent over the past four weeks as enthusiasm for the company's battery-storage business cooled. Photo by Matthias Balk/picture alliance via Getty ImagesFord Motor Co. shares have fallen sharply as enthusiasm around its earlier rally fades and a tougher economic backdrop weighs on the auto industry. Analyst price targets, however, remain elevated on hopes that earnings will continue to improve.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe stock has fallen about 30 per cent from its May peak, when investors had pushed the shares higher on beliefs that Ford would benefit from the buildout of artificial-intelligence infrastructure. Since then, analysts have raised their average price target 16 per cent, pushing the gap between Ford’s share price and Wall Street’s target to its widest in three years, according to data compiled by Bloomberg.This advertisement has not loaded yet, but your article continues below.That means either the market has become too pessimistic or Wall Street is still too optimistic. Such a disconnect isn’t unusual, said Eric Diton, president and managing director of The Wealth Alliance. But he said the market’s message on Ford is worth heeding.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try again“I believe the market before the analysts,” Diton said. “I see no reason to rush into the stock — I would rather pay more and see better fundamentals.”It’s been a volatile year for Ford. The shares surged 44 per cent in May as investors bet the automaker would benefit from the buildout of artificial intelligence infrastructure. But the rally faded as a lack of customer and capacity updates made those gains difficult to sustain.Ford shares have now closed lower in 14 of the 20 sessions since Labour Day, losing 17 per cent over the past four weeks as enthusiasm for the company’s battery-storage business cooled. Broader pressure on auto stocks from higher oil prices, interest rates and vehicle-affordability concerns has added to the weakness. October brought another disappointment when Ford reported a year-over-year decline in third-quarter vehicle deliveries.This advertisement has not loaded yet, but your article continues below.A Ford representative didn’t immediately respond to a request for comment.Wall Street, though, has yet to turn negative. None of the 23 analysts tracked by Bloomberg recommends selling the stock. Ford’s last sell-equivalent rating disappeared last month when Wells Fargo dropped coverage of 17 auto stocks amid an analyst departure.General Motors Co. also has no bearish ratings, but its shares have held up better. GM hit a record in July after strong earnings and has fallen 11 per cent from that high, while Ford shares have dropped nearly twice as much over the same period.The last time the gap between Ford’s share price and analysts’ targets was this wide was in October 2023, after a six-week United States autoworkers strike forced the company to withdraw its profit guidance.Bloomberg Intelligence’s Eric Varghese said that “research is taking a longer-term view of Ford’s earnings recovery, while the market is assigning less value to that recovery because of execution uncertainty.”The company’s third-quarter results later this month will provide the next test. A supplier problem disrupted production of its popular F-Series trucks last month, though chief executive officer Jim Farley said manufacturing is “on track” for the final three months of the year.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.But “containable does not mean ‘make-up-able,’” UBS analyst Joseph Spak said in a note Friday. The production shortfall is “a setback and a negative heading into 3Q earnings,” Citi’s Michael Ward wrote in a Friday note. Spak holds a bullish recommendation on Ford; Ward upgraded the stock to buy and set his price target to a Street high of US$20 in July.Ford is expected to report third-quarter adjusted earnings of 42 cents a share, according to Bloomberg consensus estimates. Meeting that forecast would still represent a 7.8 per cent decline from a year earlier.Although he expects the upcoming earnings season to show resilience across the auto sector, BNP Paribas analyst James Picariello said Ford would need a “heroic” increase in F-Series production to meet its full-year target after the supplier disruption.“This September downtime dynamic does remove the prospect for Ford to raise its full-year guide,” he added.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.