Ford Stock Falls After Jefferies Analyst Downgrade

The Key Takeaways

• Ford Motor stock was downgraded by Jefferies on Monday, with the firm's analysts citing the carmaker's inventory backlog as a concern.
• Jefferies lowered its rating to "underperform" from "hold" and slashed its Ford price target by $3 to $9, below Wall Street's consensus.
• Analysts say the backlog of inventory is increasing and that costs related to reorganization and warranties are rising.

Ford Motors shares dropped Monday as Jefferies analysts lowered the stock citing issues with inventory.

Jefferies ratings has been lowered to “underperform” The following is a list of the most recent and relevant articles. “hold,” Ford cut its target price to $9, down from $12. Visible Alpha’s analysts have set a new average price target below $11, which currently is above the current mean. Ford stock has recently fallen by nearly 4%.

In a client note, the analysts explained that this move was a result of the recent economic downturn. “on broad concerns ranging from inventory overhang to looming strategic decisions on European presence and a widening gap between warranty provisions and related cash outflows.”

Ford Needs to 'De-Stock' Swollen Inventory, Analysts Say

Jefferies analysts stated that they believe Ford will benefit from the likely loosening up of emission standards in the Trump White House. “de-stocking has become an overhang with US inventory,” This has now risen from a mere 96 days to over 96 in spite of strong sales.

Analysts called balance sheet the “carmaker’s” “robust rather than strong,” Warning: “potential claims from restructuring and warranty leave little cash for shareholders if Ford wants to maintain a conservative financial profile.” 

Jefferies maintains rival General Motors’ (GM) rating “hold,” Price target is $52. Shares of the company fell almost 2%.

Ford shares are down 18% in the last year. General Motors is doing much better. Shares are up about 40%.

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