Ford finally gets ‘buy’ rating from Morgan Stanley, after 4 years of bearishness
Ford Motor Co. stock rallied Wednesday after analysts at Morgan Stanley ended their four years of bearishness on it, saying the auto maker’s F-150 pickup franchise alone is worth more than 150% of the company’s value.
The analysts, led by Adam Jonas, on Wednesday raised their rating on Ford F, +3.15% to their equivalent of buy, and upped their price target on the stock to $15, which represents 35% upside on Wednesday prices.
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The upgrade pushed Ford shares to their highest in six weeks. The stock gained as much as 6.1% earlier, its largest intraday percentage increase since December 2016, when it gained as much as 7%. Recently, the shares notched their highest percentage increase since Feb. 2.
Ford shares are up nearly 5% this month, outstripping 1.5% gains for the S&P 500 index SPX, -0.42% and versus a loss of 1% for the Dow Jones Industrial Average DJIA, -0.85% In the past 12 months, however, Ford shares are down more than 11%, contrasting with 16% gains for the S&P and 19% for the Dow.
Morgan Stanley had rated Ford’s stock a sell since 2014.
“A window of opportunity has opened up for Ford,” the Morgan Stanley analysts said. The value of the F-150 franchise may be worth more than 150% of the company’s enterprise value, they said.
Negative sentiment has taken the stock’s valuation to attractive levels, and while there’s “a lot of room to improve its performance vs. peers, we believe our estimates may have bottomed,” the analysts said.
They also cited expectations that restructuring savings and future strategic moves, including the potential for spinning off its Ford Smart Mobility unit, could be a boon for the company.
Investors have been wary of Ford for some time now, clamoring for more transparency at the company, and Ford in January posted fourth-quarter results that missed the mark. Earlier Wednesday, the company issued a safety recall of 1.4 million vehicles in North America, to fix potentially loose steering-wheel bolts.
Read more: Ford stock reaches new lows as company earnings raise more questions than answers
In the past 12 months, shares of competitors General Motors Co. GM, -0.17% and Tesla Inc. TSLA, -2.23% have gained 3% and 29%.