Morgan Stanley Removes Ford From Best Ideas List

Morgan Stanley is removing shares of Ford F from its Best Ideas list, but it still has an Overweight rating and a $21 price target on shares. The removal is due to underperformance against the S&P 500. In a note to clients, Morgan Stanley writes, "After a strong start to the year, Ford has been one of the worst performing global auto stocks for 2011. We attribute this to a halt in earnings momentum starting with the near 50% 4Q10 miss. Concerns over product mix deterioration in the face of rising fuel prices and management guidance for a 2Q11 pretax no higher than 1Q, and 2H11 profit lower than 1H11 have also put a lid on consensus. Ford has the most concentrated exposure to the US car market of all publicly traded OEMs, thrown into doubt with a supply-driven collapse in SAAR since April. The continued improvement in Ford's balance sheet and credit profile appears to have gone under the radar." Morgan Stanley goes on to say, "Ford remains our #2 pick in N. American Autos where we just revised our industry view to Attractive from In-Line. Ford is in a good position to beat substantially lowered expectations for volume and mix into 2012. The model line-up remains strong and 2Q results took up-front pain for truck production cuts." Shares of F gained 8 cents yesterday to close at $14.10, a gain of 0.57%.