Buy Ford Stock for the F-150 Alone, Morgan Stanley Tells Investors

Steph Willems
by Steph Willems
buy ford stock for the f 150 alone morgan stanley tells investors

It’s no secret Ford Motor Company cut its previous CEO, Mark Fields, loose after the company’s stock price fell 40 percent during his time at the helm. Eager to attract investors, Fields’ superiors must have looked at General Motors’ and Tesla’s valuation and wondered, Dammit, if a very profitable company and a very unprofitable company can do it, then hell, so should we.

Out the door Fields went. Since taking the big chair in Dearborn, CEO Jim Hackett has pissed off automotive purists with his “future cities” and mobility talk, and word that the Mach 1 will return as an electric crossover hasn’t done anything to endear him to the pony car crowd. The new Mustang Bullitt does not erase this sin.

Animosity aside, Hackett has managed to place a checkmark next to a top item on his to-do list: get Wall Street’s attention.

On Wednesday, Morgan Stanley changed its tune on the company, reversing its classification from “underweight” to “overweight” and raising its price target from $10 to $15. It’s the equivalent of saying “buy this stock.” Since 2014, the investment firm has told investors to do the opposite.

“A window of opportunity has opened up for Ford,” the firm’s analysts wrote in a note.

Hackett’s plan to slash streamline his way to improved profitability impressed the firm, garnering the company a greatly improved earnings forecast. By cutting low-profit, slow-selling models and investing heavily in utility vehicles (Ford’s transferring $7 billion in development funds from cars to trucks and SUVs), as well as chopping $14 billion in engineering costs, Hackett wants to position the Blue Oval as Detroit’s leanest, most forward-thinking automaker. Please, no pushing when you line up to invest.

“We see Ford as an out-of-favor self-help story with room to surprise the market with cost-savings and profit repositioning potential,” Morgan Stanley analyst Adam Jonas wrote in a research note.

The firm also said the F-150 truck franchise might be worth up to 150 percent of the company’s value. It’s indeed a juggernaut, and there’s little reason to believe the F-150 won’t reign over the full-size truck segment for years to come (F-Series sales rose even during the brand’s F ebruary downturn).

The impact of Morgan Stanley’s improved outlook on Ford’s stock was immediate, if slight. Shares rose 2.2 percent by the end of Wednesday trading, adding an extra 1 percent since trading started Thursday. Despite the lift, Ford’s stock hasn’t recouped the losses seen in January, when share prices fell from $13.23 on January 12th to $10.24 on February 5th. The stock currently sits at $11.11.

[Sources: Automotive News, MarketWatch] [Image: Ford Motor Company]

Join the conversation
4 of 37 comments
  • Iamwho2k Iamwho2k on Mar 15, 2018

    Doesn't all this sound like the second coming of Jacques Nasser? He did the exact same thing, only to be blamed when oil prices boomed --and "Detroit" was blamed for not having fuel-efficient *cars* like the Japanese. About the only thing Hackett hasn't done yet is express an interest in junkyards and quick-oil-change shops. I said it before: Ford needs to go private. Despite making tons of profits since Mulally was boss their stock has really gone nowhere. Wall Street could care less if the Ford "Mach 1" is the greatest electric SUV ever built; they kneel down to worship Elon the Great.

    • JDG1980 JDG1980 on Mar 15, 2018

      There are two big differences. First, the rise of U.S. oil production (fracking) means that OPEC doesn't have the kind of sway they once did, and a gas price spike is thus less likely. Second, Ford has some good hybrid technology, and already has hybrid versions of the Escape, F-150, and even Mustang in the pipeline. Thus, in the unlikely event that we do see $4/gallon gas, Ford should still be in a good position - imagine if they have the only 1/2 ton pickup with 30 MPG city while GM and FCA are still at 15-20.

  • Big Al from Oz Big Al from Oz on Mar 15, 2018

    Well, have a look at Ford's global performance. China down 30%, Ford Australia, totally reliant on the Ranger and Mustang, what is the plan here? Trump import tariff on aluminium. Remember Ford was the only auto manufacturer to make this complaint due to dismal profits. A potential down swing in US sales. Ford is looking good, or maybe not.

    • DenverMike DenverMike on Mar 16, 2018

      Even a huge jump in aluminum material cost mean very little on the world's most profitable car, the F-series. We're not talking silver. Just to be clear, Ford builds/sells a lot of vans around the globe, and they ain't of aluminum. Ford could only "profit" from reduced/dropped tariffs, globally and the good ol' Chicken tax.

  • Sayahh Is it 1974 or 1794? The article is inconsistent.
  • Laura I just buy a Hyndai Elantra SEL, and My car started to have issues with the AC dont work the air sometimes is really hot and later cold and also I heard a noice in the engine so I went to the dealer for the first service and explain what was hapenning to the AC they told me that the car was getting hot because the vent is not working I didnt know that the car was getting hot because it doesnt show nothing no sign no beep nothing I was surprise and also I notice that it needed engine oil, I think that something is wrong with this car because is a model 23 and I just got it on April only 5 months use. is this normal ? Also my daughter bought the same model and she went for a trip and the car also got hot and it didnt show up in the system she called them and they said to take the car to the dealer for a check up I think that if the cars are new they shouldnt be having this problems.
  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.