Ford Boosts Second Quarter EBIT Estimates, Vehicle Orders Call for Increase


Global automaker, Ford Motor Company (F), announced that second quarter earnings before interest and taxes (EBIT) will be higher than expected and significantly higher compared to the same period last year. Second quarter results are expected on July 28.

Despite industry-wide semiconductor shortages, Ford is seeing an improvement in its automotive business, propelled by below-estimate costs and favorable market conditions. (See Ford stock chart on TipRanks)

In addition, Ford Credit benefits from higher vehicle auction values.

However, the company said second quarter net income will be lower than the second quarter of fiscal 20, when a $ 3.5 billion gain on Ford’s investment in Argo AI was included.

Company CEO Jim Farley said: “We deliver great value to customers today and there is much more to do as we run Ford + with strength – with iconic nameplates and leadership positions with retail and commercial customers around the world, and the best finance company in our industry at Ford Credit.

Reservations for its new vehicles have jumped to 190,000 for the redesigned full-size Bronco SUV, of which 125,000 have already been converted to orders. In addition, Ford has received 100,000 orders for the F-150 Lightning battery-electric pickup, 36,000 for the all-new Maverick compact pickup and 20,000 for the all-electric E-Transit commercial van.

BofA Securities Analyst John murphy recently updated its long-term forecast for electric vehicle penetration for the U.S. market to 7% by 2025 (up from 4.5%), and for 2030 it forecasts an electric vehicle penetration of 20% (up from 12.5%)

With an overall bullish outlook for the EV sector, supported by favorable regulations under the Biden administration, Murphy reiterated a buy rating on Ford with a price target of $ 17, implying upside potential of 15.1% from current levels. Stocks have gained 65% in the past six months.

The consensus among analysts is a moderate buy based on 9 buy, 6 take and 1 sell. The analysts’ average price target of $ 15.13 implies that stocks are almost fully valued at current levels, with upside potential of around 2.4% over the next 12 months.

Ford gets TipRanks ‘Perfect 10’ Smart score rating system, indicating that the stock has high potential to exceed market expectations.

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