Ford Motor Co. (F) is trading at a six-month low in Thursday’s pre-market after Barclays downgraded the automaker to ‘Equal Weight’ from ‘Overweight’, lowering the price target to $17. The bearish call comes in reaction to an ugly March sales report and executive decision to oppose spinning off electric vehicle production into a new tracking stock. However, EV will now comprise its own division, allowing analysts to evaluate progress and production.
Major Sales Slump
March 2022 sales fell a painful 25.2% year-over-year to just 159,328 units, sadly marking a 23.2% improvement over dismal February metrics. Chronic supply disruptions contributed to the shortfall, now compounded by soaring inflation and deteriorating consumer sentiment as a result of the Russia – Ukraine war. Ominously, the comparison was an especially easy one to achieve, with many folks dealing with strict COVID restrictions during the winter of 2020 – 21.
However, there are bright spots in the Ford catalog, raising shareholder hopes that popular sales of new and updated models will overcome falling sales of rusty old standards. As an example, F-Series booked a record 50,000 retail orders during the month, up 38,000 compared to the same quarter last year. In addition, electric vehicle sales expanded by 37.9% year-over-year, although the newly-minted EV division comprises just a small portion of total monthly revenue.
Wall Street and Technical Outlook
Wall Street consensus stands at an ‘Overweight’ rating based upon 8 ‘Buy’, 2 ‘Overweight’, 8 ‘Hold’, and 1 ‘Underweight’ recommendation. In addition, two analysts recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $13 to a Street-high $32 while the stock is set to open Thursday’s session nearly $5 below the median $20 target. This placement looks perfectly accurate, given weak monthly sales.
Ford Motor broke out above a 22-year trendline in January 2021, entering a strong uptrend that mounted 2011 resistance at 18.97 in October. The uptick ended in January 2022 at the .618 Fibonacci retracement of the 1999 to 2008 downtrend, giving way to a rapid decline that eased into a falling channel in February. It’s now failed the October breakout and 200-day moving average support, mired in a decline that could reach the lower teens in coming months.
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Disclosure: the author held no positions in aforementioned securities at the time of publication.
This article was originally posted on FX Empire
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