Ford’s profit fourth quarter, reported Thursday evening, some light came and the financial outlook for 2022 did not blow investors away. Shares traded lower Friday and could be a tough day for Ford bulls as Wall Street fails to defend shares after the income missing.
(ticker: F) the stock was $18.72 in premarket trading Friday, down 5.9%.
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futures fell 0.2% and 0.4% respectively.
Company reported 26 cents in adjusted earnings per share. It posted operating income of $2 billion against revenue of $37.7 billion. Wall Street expected earnings of 45 cents a share, along with $2.8 billion in revenue from $34.5 billion in auto sales.
Looking ahead, Ford expects to achieve approximately $12 billion in operating profit by 2022, exactly in line with analyst forecasts.
Deutsche Bank analyst Emmanuel Rosner lowered its price target to $21 from $24 a share. His problem was not with the fourth quarter issue. Rosner is concerned that the 2022 guidelines are aggressive. Ford Chief Financial Officer John Lawler said he expects better performance in the second half of 2022 as more semiconductors come online.
Global car production has been limited by a lack of chips for about a year now. By predicting an improvement in supply in the second half of 2022, Ford threatens to disappoint again this year.
RBC analyst Joseph Spak, like Rosner, shares Hold. He brought his price target to $22 from $26 a share. He asked, “will Ford’s revenues be limited by the BEV transition?” Thursday in a report. (BEV is short for battery electric vehicle.)
“It was refreshing to hear how CEO [Jim] Farley talked about BEVs that need a very different business and mindset than ICE when it comes to go-to-market, product development, procurement, talent, etc,” Spak wrote. He supports the strategic direction, but writes that the operational profit margins during the transition could be around 8%, and Spak said capital spending should increase, two headwinds for earnings and potentially for the stock, the analyst said.
Not everyone is as concerned as Spak and Rosner. “Lower than expected volume in North America due to ongoing [semiconductor] shortage and higher raw material costs were largely the cause of the miss,” wrote Benchmark analyst Mike Ward in a Friday report. “As volume recovers, we expect a recovery in working capital items and a positive impact on cash balances.”
Ward lowered his 2022 earnings estimate due to the ongoing semiconductor shortage, but left his 2023 numbers unchanged. Ward maintained his buy rating and price target of $29 for Ford stock.
Ward, however, is in the minority. Just under half of all analysts who cover stocks of Ford stock at a buy. The average Buy rating ratio for stocks in the S&P is about 58%.
The average analyst price target for Ford, shares fell to about $19.90 from $20.60 a share after earnings.
Write to Al Root on [email protected]