Ford's Mustang Mach-E Profits, Online Ordering Among Q2 Highlights For Blue Oval Analysts

Analysts are sizing up what Ford's latest earnings report means and what investors should look forward to from the automaker going forward. 

The Ford Analysts: Morgan Stanley analyst Adam Jonas has an Underweight rating and price target of $11 on Ford Motor Company F shares.

Credit Suisse analyst Dan Levy has a Neutral rating and $15 price target.

Wells Fargo analyst Colin Langan has an Overweight rating and $18 price target.

Ford Earnings Takeaways: North American pricing power helped the company report second-quarter results ahead of company and street estimates, Jonas said in a note. 

Levy sees the semiconductor shortage easing based on the comments from Ford in the earnings release. Volume demand looked strong in the second quarter and can drive upside to 2022, according to the analyst.

Langan said: "The result marked the fifth straight sizable quarterly beat for Ford and show that Ford has improved its financial track record under CEO Jim Farley." 

The analyst highlighted Ford’s strong results in North America and its Ford Credit segment.

Ford's Electric Vehicle Push: Ford delivered 2,465 units of the Mustang Mach-E in the U.S. in June, according to Motor Intelligence.

Jonas is questioning how Ford said the Mach-E was profitable in the second quarter. Whether the company meant profitable by gross margin or operating margin, the call-out is “impressive” to Jonas.

Levy calls the comments from Ford on Mach-e “encouraging.”

“We nevertheless maintain our view that there is likely margin dilution ahead associated with the transition to EV given the long path to reducing battery costs, creating a sharper negative mix effect in moving from ICE to EV,” Levy said.

One item not lost on Langan in the earnings release was Ford saying the F-150 Lightning electric pickup truck has over 120,000 orders, with 75% of the reservations coming from new Ford customers.

Related Link: Could F-150 Lightning Have More Range Than Originally Stated? 

What’s Next For Ford: One item that caught the eye of Jonas was Ford’s talk on its “order bank system.” Customers would be able to configure the exact vehicle they want and then pick it up at the dealership.

“Does this move enhance profits in the retail channel by eliminating/reducing discounts? Or does it essentially turn dealers into customer delivery centers?” Jonas asks.

The largest upside could come from volume and the easing of the chip shortage, said Levy.

“Comments of easing constraints are encouraging,” Levy said.

Langan expects higher volume and new products to offset pricing and commodity headwinds in the second half of 2021.

“We continue to see numerous catalysts including production recovery as semi capacity comes back,” Langan said.

Langan also sees the company’s focus on customers pre-ordering vehicles and lowering inventory to 50-60 days versus a historical figure of 75 as key catalysts.

F Price Action: Ford shares were up 3.75% at $14.39 at the close Thursday. 

Photo: courtesy of Ford.