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]