DETROIT (AP) -- An industry analyst raised his earnings estimates for Ford Motor Co. Tuesday after revising his annual forecast for total U.S. auto sales upward by 800,000 vehicles.
THE OPINION: Morgan Stanley analyst Adam Jonas, in a note to investors, raised his total 2012 U.S. auto sales forecast from 14 million vehicles to 14.8 million. Most automakers and analysts are still predicting around 14 million, but sales in January and February both exceeded that when projected at an annual rate. February sales were at an annual rate of 15.1 million, the best in four years. March sales are expected to be strong as well.
"We are increasing our estimates for Ford as we factor in a faster than expected recovery" in U.S. sales, Jonas wrote.
He expects Ford's pretax profit to rise 6 percent his year to $6.6 billion, with the profit in North America evenly split between the first and second half of the year. The estimate comes despite what Jonas expects will be a $550 million loss in Europe for the company.
He raised Ford's 2012 earnings-per-share estimate from $1.40 to $1.45 and reiterated his "Overweight" rating and $18 share price target. An "Overweight" rating means the stock's total return is expected to exceed the average total return of the industry over the next 12-18 months.
Jonas credited Ford with a "transformational turnaround" that makes it among a select group of global auto companies. He also cautioned about increased price competition and regulatory headwinds for the company in the long term. "The balance of forces is still dominated by a powerful volume recovery," he wrote.
Ford also likely won't pay any cash taxes to the U.S. government until early in 2014 because of credit for previous losses, Jonas wrote.
THE STOCK: Ford shares closed Tuesday down 16 cents, or 1.3 percent, at $12.32. They have traded between $9.05 and $16.18 in the past 52 weeks, reaching their peak on April 26, 2011.