Ford Rides On The Strength Of Pro, Says Analyst

Ford Motor Co F reported first-quarter revenue of $42.8 billion, with EPS of $0.49, beating the consensus estimate of $0.42.

The following is the opinion of two analysts regarding Ford's first-quarter earnings.

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Analyst John Murphy said the operating beat was driven by strong volume growth in Pro and lower losses in Model e, while Blue partially worked as an offset due to the timing of 60K F150s held in inventory.

Taxes acted as a headwind, coming in higher than expected, noted the analyst.

Ford updated its 2024 outlook, with slight adjustments to FCF and Capex, while other components were largely unchanged.

Ford is planning for 2024 industry-wide pricing to be down roughly 2%, which should play out mostly in 2H, and the analyst agrees with the trajectory of volumes, but notes pricing may be more resilient. 

Demand for Pro remains high, and new Pro products are expected to launch in 2H in Europe, which may impact volumes in the third quarter due to changeovers and launch activity, the analyst observed.

The analyst noted Ford is highlighting that EVs are a necessary tool to comply with environmental regulations, and investments in electrification will go forward despite significant pricing pressure.

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Analyst Mark Delaney said the earnings report demonstrated the strength and resiliency of Ford Pro, which drove the first-quarter non-GAAP EBIT and EPS beat. 

The analyst attributed the strength in Pro in part to the higher production and mix of Super Duty trucks as well as the growing software and services business.

The analyst noted Pro, hybrids, and Ford's cost/product efforts will be positive drivers but warned that cyclical risks and challenges in the EV business could be headwinds. 

The analyst raised the 2024 EPS estimate to $2.15 from $2.00, driven by the strength in Pro. 

Though the analyst expects Ford's new EV products and cost focus to help Model e profits longer-term, the difficult competitive environment could continue to pressure Model e profits in 2024 and 2025. 

Price Action: F shares are trading lower by 2.15% at $12.76 at the last check Thursday.

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