To call things “economically uncertain” right now is almost too great an understatement to countenance without laughing. It is no different for legacy automaker Ford (F), who recently announced that it was pulling formal guidance on its stock while the conditions in the larger economy are what they are. Investors took it well—very well!—and sent shares up nearly 3% in Tuesday afternoon’s trading.
The tariffs are, not at all surprisingly, the biggest reason Ford pulled guidance, reports noted. Ford looks for the tariffs to cost it about $1.5 billion in adjusted earnings before taxes. Jim Farley, Ford’s CEO, noted that it was still “…too early to understand our competitors’ responses to these tariffs.” But Farley did note something important: “…automakers with the largest U.S. footprint will have a big advantage.”
And that advantage goes squarely to Ford, at least for now. Barclays analysts, in a recent note, revealed “Investors have preferred Ford over GM given Ford has a much higher mix of U.S sales that are assembled in the U.S.” General Motors (GM), for example, has a 53% rate of sales assembled in the United States. Ford, meanwhile, has 79%.
The FNV4 Post-Mortem
Remember the FNV4? The “electronic brain” system that was going to put Ford on a better playing field with Tesla (TSLA) itself? Well, we know that Ford shut it down, mostly due to cost overruns and a steadily-mounting set of delays as to when the system would actually be ready. Ford ultimately decided to roll the FNV4 over into its current lineup, but new reports give us more insight as to why.
Doug Field, chief of software at Ford, recently talked to The Verge about the program, and why Ford did what it did. As it turned out, developing FNV4 proved to be a daunting task. But, as it turned out, it was called “FNV4” for a reason: there was FNV3 before it. Now, Ford is taking what it learned so far from the development of FNV4 and putting it to work in FNV3’s currently-available infrastructure, now calling it FNV3.X. This more “incremental” approach should prove more cost-effective and also open up more opportunities for Ford.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on three Buys, 11 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 8.78% loss in its share price over the past year, the average F price target of $9.50 per share implies 7.85% downside risk.
