Ford stock snagged a Buy rating from Tudor Pickering Holt & Co.
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Two analysts new to covering Ford Motor and General Motors are finding a lot to like about the traditional auto makers—so much in fact that they expect the stocks to gain about 40% from Wednesday’s trading prices.
Matt Portillo and Jeoffrey Lambujon, a team at the brokerage firm Tudor Pickering Holt & Co., point out different positives in the companies.
Portillo notes that General Motors (ticker: GM), for instance, has a “pole position” in autonomous driving, an assessment that might surprise Tesla (TSLA) investors since the electric-vehicle pioneer has been a perceived leader in driverless technology. And Lambujon is impressed with Ford’s (F) turnaround.
Tudor Pickering rates the stocks Buy. The Ford price target is $17 a share. GM’s stands at $76. Both imply gains of about 40% from the prices they’re trading now.
The new Buys, published Monday and picked up by ratings aggregators Tuesday evening, haven’t helped the stocks all that much yet. Ford is down about 1.3% over the past couple of days. GM has fallen about 2.5%. Both have declined for two consecutive days.
But the whole market is down because of rising inflation fears. The S&P 500 and Dow Jones Industrial Average are both down about 1.5%. Tesla stock, for another comparison, was down about 4% in Wednesday trading.
Tesla CEO Elon Musk has talked a lot about autonomous driving lately and plans to roll out a new version of the company’s self-driving software for testing in coming weeks. The software still requires drivers to be behind the wheel of the vehicle, but better driver-assistance functions are a competitive advantage and will, eventually, lead to business opportunities such as robotaxi services.
GM has an autonomous driving solution, too, though. It owns Cruise, a software start-up, which is testing sophisticated robotaxis. For GM’s passenger vehicles, the top-of-the-line driver-assistance function is called Super Cruise. “The value of [Cruise] may continue to rise as the company works toward [robotaxi] commercialization by 2022 in the U.S.,” Portillo worte.
Lambujon mentions that Ford also has an autonomous vehicle investment in software company Argo AI. His rating, however, appears to be driven by improving profit margins. Ford posted strong first-quarter operating profits despite the global semiconductor shortage which is forcing auto makers to make deep production cuts.
With the new Buys, now about 48% of analysts covering Ford stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P is roughly 55%. GM is more popular. About 90% of analysts rate shares Buy.
Despite differing Wall Street sentiment, 2021 has been a good year for both Ford and GM investors. Shares are up about 37% and 32% year to date, respectively, better than comparable gains of the S&P 500 and Dow Jones Industrial Average.
Write to Al Root at [email protected]
