Goldman Sachs upgrades Ford, says stock could rise

An
employee works on Ford Mondeo vehicles on the production line
during assembly at Ford plant in Almussafes on February 5, 2015
in Valencia, Spain.
David
Ramos/Getty

Goldman Sachs has upgraded Ford to
a buy rating from neutral, with a $12 price target that implies a
potential 30% upside to the struggling automaker’s. 

“While we still expect a downward earnings trajectory into 2019
(North America profit under-pressure), we believe next year will
represent trough earnings and the combination of a refreshed
product cadence globally as well as cost improvements from
strategic initiatives will begin to take hold,” David Tamberrino,
Goldman’s automotive analyst, said in a note to clients Monday,
according to the Detroit Free Press

Shares of Ford gained more than 6% in trading Friday following
the upgrade from Goldman, though the sector at large was surging after a report from China’s National Development
and Reform Commission proposed halving its tax on vehicles with
smaller engines to revive the country’s struggling
auto sector. 

Ford’s stock price has fallen more than 50% over the past year as
earnings continue to disappoint, but a global restructuring effort announced in earlier this
month has helped reverse course.

“With investor sentiment still skewed toward GM over Ford, ”
continued Tamberrino, according to the Detroit Free Press. “We believe
any incremental announcements (i.e. plant closures and business
decisions around underperforming regions/product lines) would
likely be viewed positively.”

Those products could be similar to Ford’s move to focus on its
F-series truck line by eliminating products like the Fusion
midsize sedan, Taurus and Fiesta. The F-150 remains the
best-selling vehicle
in America and has been for
35 years. In September, the company announced an
all-electric SUV that would
rival Tesla.

Goldman Sachs’ upgrade brings it into company with Wall Street’s
most bullish analysts, JPMorgan and Jefferies, which both have
$13 price targets for the stock.

Markets
Insider