Ford shares were a relative beacon of strength Friday after Deutsche Bank upgraded the automaker to "buy" from “hold,” with a target price of between $18.50 and $19 per share. The stock closed flat in a very tough tape.
The investment bank was particularly optimistic about Ford's F150 pickup truck and the company's overseas prospects, writing:
"Ford’s pickup truck price premium vs. GM’s has declined to the lowest level in years (to ~$150/unit vs. a 5-year average of $3,000), which seems to offer a significant pricing opportunity. And perhaps just as significantly, we now believe that Ford’s new F150 will be significantly more cost competitive than we originally perceived (the aluminum body may only add $750-$800 cost, and there have been opportunities to save elsewhere in the vehicle). This conclusion, combined with our favorable views of Ford’s prospects in Europe and China, leave us increasingly confident that Ford is heading for a significant earnings inflection in 2015-2016. We are upgrading Ford to Buy with a $19 target."
But despite the bullish note, two traders on Talking Numbers weren’t too eager to take the company’s stock for a joyride. Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, thinks the stock’s technicals paint a troubling picture for the automaker.
"It's a name we haven't liked for a while and we still don't like it," Detrick said on the “Talking Numbers” segment on CNBC's “Street Signs.”
Detrick said the 200-day moving average of Ford’s stock has been the demarcation line between bulls and bears over the past five years. As the stock is currently below the 200-day moving average, Detrick believes there may be rough roads ahead for Ford investors.
"It’s not pointing lower yet, but it's starting to roll over," Detrick said. "When it was pointing higher, that was a clear sign the bulls were in control. Now momentum is clearly slowing and I'd be very leery of this name and continue to think it could underperform."
Ron Dottin, senior U.S. quantitative analyst at RBC Capital Markets, is neutral on the stock and doesn’t see a strong fundamental reason to buy.
"In terms of valuation, it's everything that you'd like to see [with] very low [price-to-earnings multiples] on a forward basis," said Dottin. "Our issue is really that they're spending cash through [capital expenditures] and their ROIC—their return on invested cash—is basically lower than the market's average. We would be really neutral at this point."
To see the full discussion on Ford, with Detrick on the technicals and Dottin on the fundamentals, watch the video above.
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