Ford will shift more aggressively toward electric vehicles than investors expect, says Barclays analyst Brain Johnson.
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Wall Street is slowly warming up to Ford Motor shares. And Friday, the stock caught another upgrade, which is boosting shares.
Ford (ticker: F) stock is up about 3.5% in premarket trading. S&P 500 futures are up about 0.3%. The Invesco QQQ ETF (QQQ), which tracks the 100 largest stocks in the Nasdaq, is down 0.3%.
Barclays analyst Brain Johnson is behind the gain. He raised his rating to Buy from Hold, and his price target to $16 a share from $9—a 78% jump. Johnson believes there is a lot to like, including new CEO Jim Farley ; new products, such as the Ford Bronco and Mustang Mach-E; and cost-cutting plans.
What’s more, Johnson predicts Ford will shift more aggressively toward electric vehicles than investors expect.
Ford being perceived as an EV maker is a good thing for valuation multiplies. Volkswagen (VOW. Germany) stock is up more than 25% after it announced more aggressive EV goals as well as plans for company-owned EV battery factories. Volkswagen stock now trades for almost 13 times estimated 2021 earnings, which is a higher PE ratio than in the recent past. Ford stock trades for less than 11 times estimated 2021 earnings.
Johnson joins 32% of Ford analysts who rate shares Buy, up from 17% in the summer. The average Buy-rating ratio for stocks in the Dow Jones Industrial Average is about 60%.
Investors have warmed up to Ford stock faster than analysts though. Shares are up more than 40% year to date coming into Friday.
After Barron’s wrote positively about Ford stock, believing Farley could turn things around. Since then, shares have gained about 37%, beating comparable returns of the S&P and Dow.
Another traditional auto maker is also doing well. General Motors (GM) shares are up about 32% over the same span—and for some of the same reasons as Ford. Investors are pleased with announcements regarding EV development and are starting to believe traditional auto makers have a future in an all-electric car industry.
Write to Al Root at [email protected]
