Morgan Stanley: Ford's Beat Should Help Improve Access To Capital

Ford Motor Company F far exceeded first-quarter expectations. Its 44-cent bottom line beat a 26-cent estimate, with $37.24 billion in automotive revenue surging past a $37.08 billion forecast.

The automaker earned praise from even the most cautious analysts.

The Rating

Morgan Stanley’s Adam Jonas and Armintas Sinkevicius maintained an Equal-Weight rating on the stock with a $10 price target.

The Thesis

The analysts consider the bottom-line beat impressive given that every region contributed, revenue barely changed, and hundreds of millions of dollars had been dumped into Mobility.

“Ford delivered an extremely strong set of results in what may prove to be the most difficult quarter of the global auto industry,” Jonas and Sinkevicius wrote in a note. “[...] More importantly to Ford stakeholders, the results should help calm concerns in the fixed income upon which so much of the House of Dearborn is fueled by.”

They suspect the strong performance to inspire more stable investments and improve Ford’s access to financing.

“We believe a recent slate of restructuring announcements and strategic actions, combined with the strong 1Q19, helps provide reassurance to providers of capital,” they wrote.

Considering the beat, Morgan Stanley raised its 2019 earnings-per-share estimate 22 percent to $1.16.

Price Action

At time of publication, Ford shares traded up 6.1 percent at a rate of $10.01.

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Ford CEO Jim Hackett, right, with Executive Chairman William Ford Jr. in Detroit. Photo by Dustin Blitchok.