/Ford stock could climb another 12% on a refreshed vehicle lineup and a boost from inflation, JPMorgan says (F)

Ford stock could climb another 12% on a refreshed vehicle lineup and a boost from inflation, JPMorgan says (F)


Gabrielle Union in the Ford Maverick.
Ford Maverick.


Ford stock could climb another 12% with a boost from its refreshed vehicle lineup and inflation, JP Morgan says.

In a note to clients on Friday, JP Morgan analysts led by Ryan Brinkman reiterated their “overweight” rating on shares of Ford and increased their price target to $18 from $16.

The price target represents a potential 12% jump from Thursday’s closing share price.

Brinkman and his team said they expect Ford to benefit from the improved availability of semiconductors, a strong price/mix due, at least in part, to inflationary forces, and its new electric vehicle lineup.

Brinkman said, “a plethora of factors including unprecedented fiscal stimulus and extraordinarily accommodating monetary policy in conjunction with the reopening of the economy” are helping boost prices for electric vehicles, which is a direct benefit to carmakers like Ford.

The JP Morgan team noted that “the offsetting impact of raw material costs” usually lags behind price increases. They gave the example of steel which usually is “locked in for several quarters in advance.”

Price increases are also a result of rising demand, according to JP Morgan. Inventories at the end of May stood at just a 23 day supply, a record low, the firm said.

Brinkman also noted rising reservations for Ford’s new vehicle lineup show the company has hit the mark with their offerings, and not just in the US but internationally as well-particularly in South America and China.

The new Bronco boasts more than 190,000 reservations to date, JP Morgan says, and the F-150 Lightning electric vehicle received 44,500 reservations “and counting” in less than 48 hours after its release, according to CEO Jim Farley.

The JP Morgan analysts said in their note that a refreshed F-150 has historically led to a “substantial improvement” in North American profitability.

JP Morgan used a 4.25x multiple on their 2022 EBITDAPO estimate to arrive at their $18 price target.

The analyst support for Ford comes as the company is set to release a new small pickup truck called the Maverick on Tuesday, June 8.

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