On Friday, April 26, Ford Motor Company (F), the second-largest US automaker, surged 10.7% in a single session, marking its biggest single-day gains in over a decade. Ford’s April 26 gains were the highest since April 24, 2009, when it posted 11.4% gains during the session. The company released its first-quarter earnings results on April 25, 2019. Let’s find out if its earnings announcement was the only reason for its solid 10.7% gains on Friday.
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What drove Ford’s stock up 10.7% on April 26?
Ford’s first-quarter adjusted earnings rose by 2.3% YoY to $0.44 per share. More importantly, its adjusted earnings were far better than Wall Street analysts’ consensus estimate of $0.27 per share. In the quarter ended March 2019, Ford’s total revenue fell 3.9%, while its automotive segment (XLY) revenue went down by 4.5% YoY. Ford’s first-quarter China wholesale volumes fell sharply by ~48.2% YoY, which resulted in a 30.8% decline in its revenue from the region.
The company attributed its automotive revenue losses to its lower first-quarter vehicle sales volume mainly due to declining global industry-wide demand, discontinuation of its Ford Focus compact car in North America, and the production ramp-up for its new Explorer SUV.
Nonetheless, Ford’s EBIT margin from North America rose to 8.7% in the first quarter as compared to 7.8% a year ago. Strong profitability in North America helped Ford improve its overall automotive segment EBIT margin to 5.4% in the last quarter from 4.4% a year ago.
UBS and Craig-Hallum raised price targets
According to Thomson Reuters, both UBS and Craig-Hallum raised their price targets on Ford stock on April 26. UBS gave a price target of $11 on Friday last week as compared to its target of $10 earlier. Similarly, analysts at Craig-Hallum raised their price target to $10 from $9 earlier.
These upgrades also boosted investors’ confidence on Friday and drove its stock higher. The company had been facing analyst pessimism for a long time.