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Mixed Bag for Auto Stocks: Analysts' Recommendations in March

PART:
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Part 2
Mixed Bag for Auto Stocks: Analysts' Recommendations in March PART 2 OF 8

Analysts Are Cautious on Ford Stock in 2017

Analysts’ recommendations

According to the latest data compiled by Reuters, 35% of the 23 analysts covering Ford Motor Company (F) gave the stock “buy” recommendations, while 56% recommended a “hold,” and two analysts recommended a “sell.”

Analysts Are Cautious on Ford Stock in 2017

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Consensus target price

On March 16, 2017, Ford’s consensus 12-month target price was $13.20. It reflects a positive return potential of 3.9% from its market price of $12.70. The company’s stock has been underperforming the broader market and other auto stocks in 2017.

In the first two months of 2017, Ford’s sales fell 2.5% compared to the same period last year.

In 2016, Ford’s total US sales stood flat at 2.6 million units. While Ford’s car sales in the US fell by 13% YoY (year-over-year), its truck and SUV sales rose 6.5% and 4.9% YoY, respectively. However, stronger heavyweight vehicle sales didn’t help Ford boost its margins due to increased costs.

Key driver for 2017

During its 4Q16 earnings release, Ford highlighted the risks and challenges it could face in fiscal 2017 due to softer US auto sales. The challenges were also reflected in the company’s weak 2017 outlook.

Note that mainstream automakers (IYK) including Ford, General Motors (GM), Fiat Chrysler (FCAU), and Toyota Motor (TM) generate a significant portion of their revenues from the US market. Therefore, investors should pay attention to the indicators that suggest any possibility of a slowdown in US auto sales in 2017.

In the next part, we’ll look at analysts’ recommendations for Tesla (TSLA) in March 2017.

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