Ford Motor Ready to Play Catch-Up

Ford Motor Co. (F) posted a four-year high last week, despite a worldwide chip shortage that has forced many automakers to temporarily shut down assembly lines. The stock’s performance has lagged rivals for many years, held back by overly-conservative management and a product line that relies too heavily on truck sales. It’s also failed to announce an aggressive transition into electric vehicles, denying the buying power that’s lifted General Motors Co. (GM) to an all-time high.

Joining The EV Bandwagon

Fortunately for long-suffering shareholders, that’s likely to change in coming months. Some analysts now believe that Ford’s alliance with Volkswagen signals a shift into an aggressive electric vehicle rollout between 2025 and 2030, finally joining GM and other rivals. The Spring Investor Day looks like a perfect opportunity to announce the initiatives, which should be centered on two complimentary platforms. Look for the company to announce the event date during the Apr. 5 earnings presentation.

Barclay’s analyst Brian Johnson upgraded the stock to ‘Overweight’ and raised his price target to $16 on Friday, noting, “While we have liked Ford’s product cycle and profit improvement potential under an energetic new CEO, the lack of a clear, aggressive battery electric vehicle (BEV) strategy kept us on the sidelines. After a deep-dive into Ford Europe and in particular its Volkswagen alliance, we are more comfortable with the margin improvement outlook”.

Wall Street and Technical Outlook

Still, Wall Street consensus remains skeptical, with an ‘Overweight’ rating based upon 6 ‘Buy’, 11 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $9 to a Street-high $16 while the stock closed Friday’s U.S. session about 40 cents above the median target. While this placement suggests Ford is fairly-priced, growing bullish sentiment could ignite a rally into the mid-teens ahead of the earnings report.

Ford posted an all-time high at 38.32 in 1999 and entered a 9-year downtrend that ended at 1.01 in 2008. The subsequent recovery wave failed in the upper teens in 2011, ahead of a steady decline that posted an 11-year low in the first quarter of 2020. The stock broke out above a 21-year trendline of lower highs in January 2021, signaling the first uptrend in a decade. Multiyear resistance in the upper teens looks like a logical price target for this trend advance.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.