Ford vehicles are displayed on the sales lot at Serramonte Ford in Colma, California.
Justin Sullivan/Getty Images
Price targets for Ford Motor and General Motors have been coming down lately, and another analyst just made cuts. That’s not great news for automotive investors, but Ford stock, in particular, might be due for a pop anyway.
Citi analyst Itay Michaeli took his Ford (ticker: F) stock price target to $15 a share from $18. His General Motors (GM) stock price target was lowered to $87 a share from $98. Michaeli rates Ford stock Hold. He is more bullish on GM, rating shares a Buy.
A vehicle density survey that the analyst has conducted for 12 years or so is the reason. Michaeli tries to forecast the direction of cars-per-household in the U.S. That helps him project demand for cars in upcoming years.
The latest survey wasn’t all that bad, but it was less bullish than recent surveys. “We’re seeing a tale of two stories: (1) A visibly negative macro impact across certain age groups and regions; (2) An offsetting force likely from de-urbanization,” wrote the analyst. Macro factors that influence car-buying decisions include gas prices and financial conditions like the level of interest rates.
There are two stories embedded in the analysts’ cuts too. He is still bullish on auto stocks, despite his cuts. He calls GM stock his top pick. And he opened what he calls a 90-day catalyst watch on Ford stock.
“We believe that the results of our 2022 Density survey paint a considerably better picture of the U.S. auto cycle than current consensus thinking today,” added Michaeli in his report. “If U.S. auto data points indeed prove reassuring in the coming months, we think sentiment in Ford shares can improve.”
So things aren’t all that bad and a lot of bad news already is reflected in Ford stock these days. Shares have declined about 34% this year and are down almost 50% from their 52-week high in January of almost $26.
GM stock hasn’t fared much better. Shares have dropped about 34% in 2022. GM shares are off about 42% from their 52-week high in January of more than $67.
Both stocks were roughly flat in premarket trading Wednesday. S&P 500 and Dow Jones Industrial Average futures were up 0.2% and 0.4%, respectively.
Investors appear to be inured to the cuts. Over the past three months, the average analyst price target for GM stock has dropped to about $62 a share from roughly $74. The average analyst price target for Ford stock has gone to just under $19 a share from about $22.
Between Ford and GM, GM stock is more popular on Wall Street. About 42% of analysts covering Ford rate shares Buy. About 81% of analysts covering GM rate shares Buy.
The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
Write to Al Root at [email protected]
