There is one thought that keeps legacy automaker Ford (F) up at night, at least, to hear CEO Jim Farley talk about it. The thought in question is Chinese cars in the United States, a move that he describes as potentially “devastating” to Ford’s long-term health. Investors took it in stride, though, and gave Ford a massive boost in share price, up over 4% in Tuesday afternoon’s trading.
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While there is currently a price war on in China’s automotive sector, Ford is terrified by the notion that such a condition could come to the United States. Farley even recommended, strongly, that the United States should maintain its 100% tariff on Chinese carmakers, which will basically keep them out of the United States altogether. Chinese carmakers, Farley noted, get staggering amounts of support from the government, which destabilizes the market. Further, these cars also come with a panoply of cameras that could be used to collect data on Americans.
White House spokesman Kush Desai made it fairly clear that Trump would support keeping Chinese cars out of the United States. Desai noted, “No president has done more to revive the American auto industry than President Trump, who has championed an aggressive agenda of auto tariffs, rapid deregulation, tax cuts, and even a new tax deduction on interest payments for Made-in-USA autos.”
Do Not Fret About Aluminum
Meanwhile, UBS analyst Joseph Spak made it pretty clear that Ford was worth buying in on right now. The recent concerns about gas prices and aluminum supply should not get in the way of buying in, Spak noted. Spak raised his rating on Ford from Neutral to Buy, and kept a price target of $15 per share in place.
Spak elaborated, saying, “Investors have been very focused on the impact of aluminum prices for Ford. However, we believe concerns are overblown.” Spak also notes that Ford has likely “hedged” its aluminum exposure for the rest of this year, and steel prices are already set in contract. Thus, there is little risk to earlier guidance, and that leaves Ford shares in a buy-the-dip situation.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on four Buys, eight Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 28.68% rally in its share price over the past year, the average F price target of $13.96 per share implies 9.93% upside potential.
