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Ford Stock Falls After Earnings. What Wall Street Thinks.

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Ford’s Maverick in hybrid form, with 37 mpg combined.
Ford photo

Ford Motor ‘s fourth-quarter earnings, reported Thursday evening, came in a little light, and financial guidance for 2022 didn’t blow investors away. The stock was trading lower F riday, and it could be a tough day for Ford bulls since Wall Street isn’t defending shares following the earnings miss.

Ford (ticker: F) stock was at $17.92 in early trading Friday, down 9.9%. The S&P 500 is up about 0.4%, while the Dow Jones Industrial Average has fallen about 0.1%.

The company reported 26 cents in adjusted per-share earnings. It posted $2 billion in operating income from $37.7 billion in sales. Wall Street expected earnings of 45 cents a share along with $2.8 billion in operating income from $34.5 billion in vehicle sales.

Looking ahead, Ford expects to earn about $12 billion in operating profit in 2022, right in line with analysts’ projections.

Deutsche Bank analyst Emmanuel Rosner lowered his price target to $21 from $24. His problem wasn’t with the fourth-quarter number. Rosner has concerns that the 2022 guidance is aggressive. Ford Chief Financial Officer John Lawler said that he expects better performance in the second half of 2022 as more semiconductor supply comes online.

Global automotive production has been constrained for about a year by a lack of chips. Projecting second-half 2022 improvement in supply puts Ford at risk of disappointing again at some point this year.

Rosner rates Ford stock at Hold, as does RBC analyst Joseph Spak, who took his price target to $22 from $26. He asked “are Ford earnings capped by the BEV transition?” in a report Thursday. (BEV is short for battery-electric vehicle.)

“It was refreshing to hear how CEO [Jim] Farley talked about BEVs needing a completely different business and mindset vs. ICE when it comes to go- to-market, product development, procurement, talent, etc,” wrote Spak. (ICE is short for internal combustion engine.)

Spak supports the strategic direction, but wrote that operating profit margins during the transition might top out at about 8%. What’s more, he wrote that capital spending needs to rise. Those are two headwinds for earnings, and potentially for the stock, according to the analyst.

Not everyone is as worried as Spak and Rosner. “Lower-than-expected volume in North America related to the ongoing [semiconductor] shortage and higher commodity costs largely accounted for the miss,” wrote Benchmark analyst Mike Ward in a Friday report. “As volume recovers, we expect a recovery in working capital items and a positive impact on cash balances.”

Ward reduced his 2022 earnings estimate due to ongoing semiconductor shortage, but he left his numbers for 2023 unchanged. Ward maintained a Buy rating on Ford stock with a $29 price target.

Ward is in the minority though. Just less than half of all analysts covering Ford rate the stock at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.

The average analyst price target for Ford stock dropped to $19.90 from $20.60 after earnings.

Write to Al Root at allen.root@dowjones.com

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