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A number of analysts on Friday raised the target price on Ford Motor Co. stock following the automaker’s better-than-expected third-quarter results, particularly outside North America, where Ford turned a cumulative profit for the first time since the second quarter of 2011.
JP Morgan Chase & Co. upped Ford’s target price to $23 from $21; Sterne Agee raised theirs to $21 from $20; and Barclays raised theirs to $20 from $19.
Ford’s stock on Thursday momentarily topped $18 for the first time since January 2011; on Friday the stock hovered in the mid-$17 range.
The target price jumps come one day after Ford announced a third-quarter net income was $1.27 billion, or 31 cents per share — down $359 million, or 10 cents per share, from the same period in 2012. But excluding special items, the Dearborn automaker posted a $2.6 billion pretax profit, or 45 cents per share (analysts expected 38 cents), and said its 2013 pre-tax profit would top last year’s $8 billion total.
The biggest news came from Ford's three regional operations outside North America, which turned a collective profit for the first time since the second quarter of 2011. Ford's South American region posted a $159 million profit and the Asia-Pacific-Africa region turned a $126 million profit. That helped offset a lower-than-expected $228 million loss in Europe.
“We can see a clear path to a return to solid profitability in South America; Europe losses are narrowing sooner than expected as management consults its own playbook from the North America turnaround; and large investments in China are beginning to pay off as sales surge,” said JP Morgan analyst Ryan Brinkman in an investor note.
Ford expects South America to be break even or profitable this year; European losses won’t match or exceed the $1.8 million pitfall from 2012; and, long term, Ford expects most of its planned 2 million vehicle sales increase — to take place during the next three years or so — to happen because of its growing presence in Asia.
“The (third quarter) results allow investors to envision a Ford in which profits stem from each of Ford's segments, not just North America and (Ford) Credit,” said Brian A. Johnson, analyst at Barclays.