Why This Ford Analyst Was 'Pleasantly Surprised' By Dearborn's Outlook

Ford Motor Company’s F outlook for the second half of the year remains “mixed but reasonable,” according to Morgan Stanley.

The Ford Analyst: Analyst Adam Jonas maintained an Overweight rating on Ford and established a price target of $8.

Takeaways On Ford: The analyst named these takeaways from Morgan Stanley’s conference call with Ford in a Friday note: 

Cash burn was better-than-expected. The second-quarter cash flow was negative $5.3 billion, but expected cash burn was $12 billion. Ford also finished up its second quarter with $40 billion in gross liquidity.

“We were pleasantly surprised that the company gave even the basic level of quarterly granularity to its 3Q and 4Q earnings outlook,” the analyst said, characterizing the outlook as stable.  

When Ford CEO Jim Hackett was asked about battery IP risk, he said the challenges include supply chain issues and litigation, according to Morgan Stanley. 

"We're hopeful that, that gets settled quickly. It really doesn't matter to us how it gets settled, but it may — it confuses some of the suppliers about their investments in some of their plants here in the United States," Hackett said. 

Jonas said Ford has more room for improvement in its operating performance than any other original equipment manufacturer in Morgan Stanley's coverage.

F Price Action: Ford shares were up 0.76% at $6.66 at last check Monday. 

Photo courtesy of Ford.