Deutsche Bank analyst Emmanuel Rosner raised his price targets for both Ford and GM stock, but he still prefers GM.
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This year will present some unusual challenges for the entire automotive sector—from parts companies to car makers. Business will be battling high inflation, low inventories, semiconductor supply issues, and Covid all while trying to produce more electric vehicles.
Against that backdrop, Deutsche Bank analyst Emmanuel Rosner prefers General Motors (ticker: GM), which he rates at Buy, to Ford Motor (F), which he rates at Hold. Rosner, however, raised price targets for both GM and Ford stock, to $71 from $67, and to $24 from $18, respectively.
GM stock is up about 0.5% in Thursday morning trading at $61.33, while Ford stock is up about 0.7% at $24.65. The S&P 500 index and the Dow Jones Industrial Average are up 0.2% and 0.3%, respectively.
Rosner expect both companies to offer solid outlooks for 2022 when they report fourth-quarter numbers in coming weeks, “reflecting unusual concurrentpositive industry conditions of volume recovery and robust pricing, offsetting cost inflation.”
His isn’t a bullish on the outlooks for parts suppliers such as Aptiv (APTV) and Visteon (VC). “This will reflect more cautious management outlooks around the shape of 2022 volume recovery, their growth above market and especially incremental margins, amid ongoing supply constraints, normalizing vehicle mix, and cost headwinds from commodities, freight, labor, and energy,” wrote the analyst in his Thursday report.
Rosner doesn’t think parts suppliers will have a bad 2022, per se. He believes, however, guidance will be an important event to reset investor expectations. He actually rates both Aptiv and Visteon stocks both Buy—even though he is warning his clients to expect weak initial guidance for the coming year.
As for Ford, Rosner has been Hold rated since late 2019. The stock appears to looks a little expensive for him. His price target works out to about 12 times his estimated 2022 earnings per share, very close to where the stock is trading. His GM price target works out to about 10 times his estimated 2022 EPS. GM is trading for less than 9 times his 2022 EPS estimate.
Overall, Rosner’s peers see things similarly. For GM, 88% of analysts covering the stock rate shares at Buy. About 54% of analysts covering Ford stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
The average analyst target price for Ford is a little above $21, implying a drop of about 13% compared with trading levels of the past couple of days. The average analyst target price for GM stock is about $76, implying gains of about 26% from recent trading levels.
Write to Al Root at [email protected]
