Goldman Sachs upgrades Ford stock to 'buy'

Ian Thibodeau
The Detroit News
Goldman Sachs analysts upgraded Ford Motor Co. stock ahead of a stream of new product launches planned for 2019 and 2020.

Goldman Sachs analysts upgraded Ford Motor Co. stock ahead of a stream of new product launches planned for 2019 and 2020.

The investment firm revised its 12-month price target from $9 per share to $12 per share, analyst David Tamberrino wrote in a note to investors Monday. It upgraded the stock from a "neutral" grade to a "buy".

The upgrade comes just more than a week after Morgan Stanley downgraded its rating for Ford stock, and less than a week after Ford beat analyst expectations with its third-quarter earnings.

"The combination of refreshed product cadence globally as well as cost improvements from strategic initiatives will begin to take hold," Tamberrino wrote. "And with investor
sentiment still skewed toward GM over Ford, we believe any incremental announcements (i.e., plant closures and business decisions around under-performing regions/product lines) would likely be viewed positively."

Ford stock had a tumultuous month. Shares dipped below $9 for the first time in six years in early October. On news of the upgrade Monday, Ford shares closed the day up 3.3 percent $9.28 per share. The stock is down more than 26 percent this year, and is off about 20 percent since CEO Jim Hackett ascended to the top job in May 2017.

Company spokespeople have said repeatedly that "the entire company is moving with a sense of urgency and taking proactive steps to redesign and restructure the business," and Ford is "confident that over time, the market will recognize our progress." 

Tamberrino wrote Ford could battle plateauing U.S. sales and declining sales in China with its new products coming to market in early 2019. CEO Jim Hackett's $25.5 billion cost-cutting push will help the bottom line as well. The $11 billion global restructuring will "deliver long-term benefits," he wrote.

The automaker saw a response on the stock market when it announced its third quarter earnings that were better than anticipated, and performance in North America that, according to Ford officials, was already showing fruits of Hackett's cost cutting initiatives.

Ford is currently preparing for a string of new or refreshed products planned for 2019, including the Ranger midsize truck.

"One of the larger reasons that we believe Ford has underperformed its peers is
due to its aged product line-up – particularly in its cross-over segment," Tamberrino wrote. "An upcoming product refresh in 2019/2020 – for both passenger cars in China and crossovers globally, we see the company have the potential to re-gain ground." 

Twitter: @Ian_Thibodeau