Ford Motor Company is facing a challenging road ahead, according to a recent analysis from Jefferies. Analyst Philippe Houchois and his team at Jefferies lowered their rating for Ford Stock from "Hold" to "Underperform" and reduced the price target significantly from $12 to $9.
On Monday, Ford Stock dropped 3.9%, closing at $9.98. This marks a year-to-date decline of 15% as of last Friday.
The analysts noted that Ford might see potential benefits if President-elect Donald Trump relaxes vehicle emissions regulations and modifies electric vehicle policies. However, they cautioned that the timing and scale of any such impact remain uncertain.
In the near term, Ford is grappling with rising U.S. inventory levels, which outpace its competitors despite strong sales performance. While consistent production has helped the company maintain lower guidance for 2024, this trend could signal a more difficult beginning for 2025, according to the report.
Jefferies also highlighted other significant challenges for Ford, including the need to rightsize its operations if it decides to maintain its European market presence. Additionally, Ford has yet to unveil a clear electrification strategy, which the analysts suspect may lean toward using range extenders as a focal point.
“We are downgrading Ford to ‘Underperform’ due to mounting earnings pressure and a series of difficult decisions the company must make,” Jefferies stated. While restructuring efforts could prompt a positive response, the firm expressed concerns about the timing and potential effects on Ford’s balance sheet.
In response, Ford spokesperson Ian Thibodeau told Barron’s, “We’re leveraging our competitive advantages in areas like Ford Pro, software, next-generation electric vehicles, and offering customers a choice between gas, hybrid, and electric options in our successful lineup. Over time, we see significant opportunities as we improve costs and quality—a critical focus for our team.”
Meanwhile, Jefferies maintained its “Hold” rating on General Motors, with a price target of $52. Analysts praised GM’s steady leadership and commitment to its EV strategy, noting that the company has made tactical adjustments without resorting to a major overhaul. GM's shares declined by 2.2% on Monday, closing at $51.37.