Ford's Cost Reductions And Transition In Focus, Analysts Trim Forecasts Amid Lackluster 2025 Guidance

Ford Motor Co F reported fourth-quarter FY24 earnings results yesterday. The following are the comments from various analysts on the company’s performance.

Goldman Sachs analyst Mark Delaney reiterated a Buy rating on the shares and maintained a price forecast of $11.00.

Ford reported fourth-quarter 2024 revenue and adjusted earnings per share of $48.2 billion and $0.39, respectively, surpassing the Street’s (FactSet) estimates of $47.4 billion and $0.34, as well as Goldman Sachs’ predictions of $43.9 billion and $0.34.

Ford’s 2025 outlook accounts for a decline in wholesales (particularly in the first quarter), pricing pressures, and $1 billion in net cost reductions, mainly stemming from reduced warranty expenses and material costs. However, it does not consider the potential impact of policy or tariff changes, noted the analyst.

The 2025 guidance is below the analyst’s expectations, mainly due to lower volumes and, to a smaller extent, foreign exchange impacts.

The analyst’s assumption that a strong U.S. auto market, Pro, and the mix of software and services would lead to relatively stable EBIT turned out to be incorrect.

Despite the weaker guidance, the analyst anticipates profits to improve from the lower base in the first half of 2025.

Ford has indicated potential savings exceeding $1 billion, and the analyst expects further progress in 2026 as the company benefits from improved initial build quality and cost-saving actions in Europe, which will take time to impact the profit-and-loss statement.

Also Read: Tesla Sales Drop 60% In Germany: Are Elon Musk’s Politics Getting In The Way Of EV Growth?

RBC Capital analyst Tom Narayan reiterated a Sector Perform rating on the shares and lowered the price target from $10.00 to $9.00.

Management has issued guidance for 2025, predicting a decline in EBIT compared to 2024 for both Blue and Pro segments, noted the analyst.

This forecast factors in lower industry volumes, negative foreign exchange effects, reduced net pricing due to higher incentives, and launch costs related to the Kentucky truck and Michigan assembly plants.

However, these challenges are offset by stronger F-150 sales and $1 billion in cost reductions, mainly from lower warranty and material expenses, said the analyst.

The analyst notes that inventory days are higher than usual, which may result in reduced net pricing. Additionally, Ford is dealing with challenges related to launch costs, and increasing EV volumes are expected to impact profitability.

BofA Securities analyst John Murphy reiterated a Buy rating on the shares and lowered the price target from $19.00 to $15.5.

Ford posted an adjusted EPS of $0.39, surpassing the analyst’s estimate of $0.33 and the Bloomberg consensus of $0.32.

The outlook for 2025 is notably more conservative than expected by BofA, with Ford forecasting adjusted EBIT to range between $7.0 billion and $8.5 billion.

While the first half of 2025 may face temporary challenges, the analyst anticipates stronger profits and progress in the second half of 2025 and beyond.

Price Action: F shares are trading lower by 6.44% at $9.37 at the last check Thursday.

Photo via Shutterstock.