Credit Suisse: Ford Earnings: There’s a Beat in the Making

The auto industry is going through one of the biggest transformations in its history. Auto design has seen a shift in the wake of the rise of EVs, and autonomous vehicles.

It’s obvious that legacy automakers must adapt to the changing landscape. This is why industry giants like Ford ( F ) are also moving towards this new opportunity.

This has been noticed by the market and it has awarded the legacy brand a commendation. Ford shares have risen by 80% in the last 12 months.

Credit Suisse analyst Dan Levy believes the stock could rise further as it heads into 4Q21’s earnings today.

The analyst stated that “Even though Ford stock has had an incredible performance, we still see potential upside in the narrative surrounding Ford transitions.” Ford and GM both see the upside of multiple expansions as the market appreciates the opportunity to transition to an EV/Auto 2.0 world.

Levy thinks the company’s EV-transitioning strategy is a success. He notes that customers have responded positively to the company’s EV products while it has taken a more aggressive approach to boosting its EV supply. It also sees itself as being ahead of GM with its soon-to-be available Mach-E, F-150 Lightning. Levy adds, “Moreover, we see Ford’s near term operational strength as an opportunity for us to accelerate the transition (i.e. Mastering the ‘balance between the two clocks ‘).”

Levy is “modestly in front of consensus” when it comes to what investors can expect from the financial statements. He anticipates 4Q EPS at 54c, compared with the Street’s 44c. His 4Q EBITDA forecast is $3.0billion, which is just a little above the consensus estimate $2.9 billion. Levy anticipates that Ford will lead to an increase in year-over-year profits if volume recovery is more than offsets by price/mix/captive financing normalization.

Overall, the analyst kept an Outperform rating (i.e. Ford stock was given a Buy rating by the analyst, and the price target was raised to $26 (from $23). Investors can expect upside of up to 30% if the target is met.

Levy’s new goal is just slightly higher than the Street’s average target of $24, which suggests that shares can grow by 20% over the next few months. The consensus breakdown of 7 Buys and Holds for each stock, plus 2 sells, suggests that analysts consider this stock a Moderate buy.
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