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Ford Driving Toward 2H Upside

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Even some of the manufacturers who were worst hit by the global semiconductor shortage have the chance for redemption. Unfortunately for auto producers, just as economies began to roar back to life, they were faced with another worldwide crisis. The Ford Motor Co. (F) was one of the most affected manufacturers, but that can also mean its future will look great in comparison. (See Ford stock charts on TipRanks)

Ford’s June quarterly results and outlook were discussed by Michael Ward of Benchmark Co., who wrote that the company had beaten Wall Street’s consensus on earnings, as well as eased concerns about the shortage.

Ward reiterated a Buy rating on the stock, and assigned a new price target of $18. This target is an upgrade from his previous $16, and now reflects a potential 12-month upside of 29.40%.

The five-star analyst explained that despite Ford’s upbeat earnings, they were still lower than the previous quarter. Sales from North America and Ford Motor Credit (Ford’s financial services body) carried the earnings, with support from restructuring in South America and elsewhere.

Regarding the chip shortage, Ward stated that Ford was able to mitigate costs and “prioritize mix to keep income positive.” From here on out, the analyst believes the issue will recover, or at least lessen in severity. The second half of FY21 may see a chip replenishment, which could signal strong upside for a hard-hit company like Ford.

The improving global market is allowing for production to gain momentum, with Ford seeing strong orders for many of its new products, including the all-electric "Lightning" pickup truck.

On TipRanks, F has an analyst rating consensus of Moderate Buy, based on 8 Buy and 5 Hold ratings, and 1 Sell rating. The average Ford price target is $16.24, suggesting a possible 12-month upside of 16.75%. Ford closed trading Monday at a price of $13.91 per share.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.