6 Reasons To Be Bullish On Ford In The Near Term

Last Friday, Ford Motor Company F CEO Mark Fields met with Wall Street analysts in New York to discuss Ford’s business and stock. Deutsche Bank analyst Rod Lache noted six bullish takeaways from Fields’ message:

• 1. Ford management still likes what is sees from the North American market.
• 2. Market fears that the U.S. auto market has peaked are excessive.
• 3. The market is underestimating the benefits that Ford will reap from the near-term market shift toward SUVs.
• 4. If a market downturn does occur, Ford management is committed to maintaining profitability via cost-cutting and pricing measures.
• 5. Ford is exploring “significant” new revenue opportunities, including ride sharing and insurance.
• 6. Ford management believes that the market is already pricing the worst-case recession scenario into Ford’s stock.

While he understands the frustrations that management has regarding Ford’s share price, Fields said the market simply has no confidence in Ford right now.

Related Link: Despite Strong Earnings, Goldman Remains Cautious On Auto Suppliers

“Auto stocks tend to trade on confidence, and we expect the market to assign a relatively low multiple until the Street can get over the risks (e.g. U.S. is 7 years into the cycle, regulatory costs are rising, used vehicle prices are falling, credit is no longer loosening, scrappage + growth in licensed drivers have declined, capacity is growing, retail sales appear to have flattened),” he explained.

Deutsche Bank maintains a Hold rating and $16 price target for Ford.

Disclosure: The author holds no position in the stocks mentioned.