Ford Motor Company (F 1.66%) stock has maintained momentum since rebounding in December, and several analysts now believe it could surge given the latest developments, including strong quarterly numbers and guidance for 2024, a supplemental dividend, and a strategic shift in spending away from cash-burning electric vehicles (EV).
Why are analysts raising Ford stock's price target?
Morgan Stanley analyst Adam Jonas just raised Ford stock's price target to $16 per share from $15, representing nearly 29% upside from the stock's price around $12.40. Earlier this month, Citigroup analyst Itay Michaeli also raised Ford stock's price target to $16 per share while Bank of America analysts see the stock hitting $19 per share.
The earnings release on Feb. 6 gave analysts ample reasons to turn bullish.
NYSE: F
Key Data Points
Ford's Q4 revenue and earnings handily beat analysts' estimates. Ford declared a supplemental dividend of $0.18 per share above a regular dividend of $0.15 per share for the first quarter. CEO Jim Farley even called 2023 a "foundational year" for Ford at its Q4 earnings conference call. Key numbers for 2023 include:
- Revenue: Up 11% to $176 billion
- Adjusted earnings before interest and tax (EBIT) flat at $10.4 billion
- Net income of $4.3 billion versus a loss of $2 billion in 2022.
For 2024, Ford projects adjusted EBIT of $10 billion to $12 billion and expects its commercial vehicle business, Ford Pro, and gas-and-hybrid vehicle division, Ford Blue, to offset losses from its EV segment. Although Ford believes EVs are "here to stay" and is developing next-generation models, it is deferring investments in EVs for now given a global slowdown.
Ford stock is a buy for 2024 and beyond
Ford's efforts to cut costs and reallocate capital from loss-making EVs to higher-margin segments reflect management's agility in the face of macro challenges. Meanwhile, it also aims to pay 40% to 50% of adjusted free cash flow in dividends. Trading at less than one-third its five-year price-to-earnings (P/E) ratio and yielding 4.8%, Ford stock looks like a solid buy now.
