By on March 15, 2018

2018 F-150 Power Stroke Diesel, Image: Ford

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 February 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]

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37 Comments on “Buy Ford Stock for the F-150 Alone, Morgan Stanley Tells Investors...”


  • avatar
    dukeisduke

    But what about “Buy Ford Stock In Spite of Jim Hackett”? How could a company that hired Alan Mulally also hire Jim Hackett?

  • avatar
    EBFlex

    The company that’s run by a furniture sales man and just blew a BILLION dollars on a rebadged Fusion that they’re killing off after one generation? You are advising people to buy that stock?

    You’re kidding right?

  • avatar
    dukeisduke

    What does Adam Jonas drive? I’m thinking something like a BMW X1.

  • avatar

    Hackett apparently wants to rank as one of the worse automotive CEOs of all time.

    • 0 avatar
      dukeisduke

      Does he have a picture of Roger Smith in his office?

    • 0 avatar
      dwford

      I’ve never seem such a snap back to bad habits as I’ve seen in the last 2 years at Ford. Shocking. Mark Fields brought back the intra-office political fighting, and now Hackett has brought back the short term thinking on product development.

      • 0 avatar
        PrincipalDan

        Which means Mualally didn’t change the corporate culture as much as he perhaps thought he did.

        Dirty shame too.

        “A bad system will beat a good person every time.” W. Edwards Deming

        • 0 avatar
          Weltron

          Ford seems to go in cycles like this. They have a period of great success and good products, and then they start going downhill, due to poor management, but then after a while, then they get a great executive and things spring back up again.

          • 0 avatar

            Hackett is already one of the worst Ford CEOs ever. It is going to be hard to recover from Hackett’s reign. He has already demoralized a lot of the Ford fan base.

  • avatar
    30-mile fetch

    “The firm also said the F-150 truck franchise might be worth up to 150 percent of the company’s value.”

    Ford knows many things I don’t, and the F150 is a pretty diverse model in a massively popular segment, but having the entire company rest on a single product would make me really nervous.

    • 0 avatar
      JohnTaurus

      It also knows it has some of the top selling utilities (best selling 3 row, for example), vans and sports cars. Just sayin’.

      • 0 avatar
        30-mile fetch

        I won’t deny that, John, they’ve got some very strong sellers. I’m also not a student of the issue, but some company-wide profit numbers and F-series profit numbers that have floated by in various stories have left the impression that most of Ford’s profits ride on this vehicle. If true, that would suggest the other big sellers aren’t turning much per-vehicle profit; they’re killing the Fusion despite 200K annual sales.

        But I could be very wrong here, and it’s not intended to disparage the Blue Oval.

    • 0 avatar
      TMA1

      Just keep an eye on oil prices. Until gas hits $4 again, the F-Series will do just fine.

      • 0 avatar
        dukeisduke

        The addition of the turbo diesel option is genius. If gasoline starts moving toward $4.00, they can just change the mix to more diesels. And maybe lower the cost of the diesel option, pretty please?

        • 0 avatar
          28-Cars-Later

          The fuel economy advantage of diesel has been largely mitigated post 2007 from what I understand (not to mention the existing increased taxation specifically on diesel fuel).

          No mileage for old proles.

      • 0 avatar
        SD 328I

        Not likely to happen anytime soon, gas prices might spike from time to time, but US Frackers are likely to come in before that can happen.

        Won’t matter too much, even when gas prices were historically high at over $4 a gallon, the F150 was still the best selling vehicle in America. I think the Civic won a month or two, but that was it.

        Also add to the fact that modern trucks are more fuel efficient than before, some rated at 29 mpg for diesel and mid-20s for gas. Quite a bit better than 15 mpg highway just a few years ago.

      • 0 avatar
        ajla

        Anyone thinking that higher fuel prices will kill the F-Series (or even knock it out of the top-5 sales chart) is incorrect.

        Anyone thinking that higher fuel prices won’t negatively impact F-Series sales volume (even if it remains the top selling vehicle in the country) and won’t be very painful for FMC is also incorrect.

        • 0 avatar
          DenverMike

          If fuel prices do kill the deal for a significant number of F-150 buyers, what’s nearest “fuel sipping” alternative?

          Yes assuming there’s no real “alternative” for buyers of HDs, 1-tons etc, keeping in mind the “F-series” sells the most HDs pickups, vs 1/2 tons.

          So would a Ford Escape or Edge do the trick as an F-150 alternative?

          Those wouldn’t replace the profits of F-150s unless volume increases by hundreds of thousands. Figure profits of Escapes/Edges/Etc are mostly limited by limited production/sales

          Except pickups are way more expensive to engineer/produce/build than unibody wagons/utilities in just a small handful of configuration, and sharing the platform with various cars/marques.

          • 0 avatar
            WalterRohrl

            A Toyota Corolla will do all of the things that probably 90% of F-150 buyers do with their trucks. A few tow something occasionally, a few more seem to get mulch more than once a year. A bunch drive to nearby a construction site and then sit parked all day long. And the owners of a few more are probably too obese to fit into anything much smaller. The rest just like having and/or driving one, which is PERFECTLY FINE AND A VALID CHOICE FOR THEM AND MAY THEY LIVE HAPPILY EVER AFTER. But purely as something that would replicate actual usage for the majority of owners? Corolla or similar.

          • 0 avatar
            DenverMike

            That’s fine, and a Moped will do all of the things probably 90% of Corolla buyers do with their cars.

            Keep in mind about 40% of F-150 sales are straight “fleet” buys.

            Most F-150s that do get “worked” (as they all should?) you’ll still see empty (or not towing) most of the time. Or with a load as high or below the bed sides.

            Even of “18-wheelers”, most are lucky to “haul air” only half the time.

            I’m not sure what you’d call “justified”, but I’m somewhere in the middle. Yeah I’m not sure exactly when I’ll “need it”, but like too many other non-essentials, it’s better to have one and not need it, than need one and not have it.

      • 0 avatar
        JDG1980

        Ford has a hybrid F-150 in the pipeline for 2020. They should be in decent shape even if gas prices do spike.

    • 0 avatar
      Lou_BC

      “By cutting low-profit, slow-selling models and investing heavily in utility vehicles”

      And all the while we have Mr.Bark searching for someone to blame/click-bait over the impending demise of small light sports cars!

  • avatar
    Sub-600

    Ford would be better off with Buddy Hackett at the helm. I’d sell any stock I had in the company that makes Ford’s steering wheel bolts.

  • avatar
    PrincipalDan

    Wall Street to Morgan Stanley: “Well DUH!”

    What’s your next revelation Captain Obvious? That Jeep and Ram are the most valuable parts of FCA?”

  • avatar
    Gardiner Westbound

    “I view the stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their ‘chart’ patterns, the ‘target’ prices of analysts or the opinions of media pundits.” – Warren Buffett

  • avatar
    dwford

    The only thing Hackett is doing is the standard belt tightening to goose short term profits. Where are all the new cars? Here in the US, the Fiesta is out, the Taurus is basically out, the replacement for the Fusion is out, C-Max is out, the Continental is getting the middle finger of a leaked plan to kill it.

    The entire next generation of Fords being designed seem to be dead, except for the Explorer and the Focus. Hate to say it, but I miss Mark Fields. He had the whole next generation of Fords in the pipeline to replace the Mulally cars, and had a plan for electrification and AI. What do we have now? Nothing.

    • 0 avatar
      JDG1980

      “The only thing Hackett is doing is the standard belt tightening to goose short term profits. Where are all the new cars? Here in the US, the Fiesta is out, the Taurus is basically out, the replacement for the Fusion is out, C-Max is out, the Continental is getting the middle finger of a leaked plan to kill it.”

      Your mistake is to equate “cars” with sedans, coupes, and low hatchbacks. These form factors are falling out of favor. Ford is focusing on the cars (and trucks) that people want – crossovers and pickups.

      • 0 avatar
        Big Al from Oz

        JDG1980,
        I agree with your sentiment.

        I see Ford heading for troubled waters at the worst or a taking a sustained knock in profits for a while.

        Ford blamed commodity prices for it’s lacklustre performance. Like GM, Ford is failing outside of the US. The US is mainly kept afloat by the F Series and F Series station wagons.

        Now, here’s a curve ball, say Donnie Thump actually gets some movement in the tariff on US vehicles exports. So, in return the US must reduce it taxation on over half the value of it’s industry, supported by the 25% Chicken Tax. Ford and GM will take a bigger hit than the other manufacturers in the US.

        Steel and aluminium will cost more, putting more pressure on Ford’s bottom line they are snivelling about with commodity prices.

        China’s performance has dropped 30%. I don’t see Ford as a great investment. It’s better than Tesla.

  • avatar
    James2

    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.

    • 0 avatar
      JDG1980

      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.

  • avatar
    Big Al from Oz

    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.

    • 0 avatar
      DenverMike

      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.

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