the stock rebounded on Tuesday after an analyst at Morgan Stanley called the recent dip in the shares a buying opportunity.
The back story. Last month, Ford revenues in the second quarter lost Wall Street expectations, sending the stock (ticker: F) below $ 10. Total sales in China fell 14% in the first half, with the company's losses rising to $ 144 million in the quarter.
After the fall, William Clay Ford Jr., CEO of Ford Motor and the great-grandson of founder Henry Ford, collected 840,962 shares for $ 8 million, with an average price of $ 9.51 per share. The stock was down $ 9.24 by Monday's close.
What's new. The Ford stock picked up just after the market opened Tuesday and outperformed it
In a note to clients early Tuesday, Morgan Stanley analyst Adam Jonas upgraded his rating on the stock to Overweight from Equal Weight. He wrote that Ford's restructuring and strategic actions, as well as better product mix, drove the upgrade.
Jonas had previously expected a 40% decline in revenue through fiscal year 2022. But he now says it does not include incremental restructuring savings. His new forecast is for stable profitability of around $ 1.20 to $ 1.30 per share through 2022.
"Our past concerns about Ford's ability to maintain its dividend payout have largely subsided," he wrote. "Our revenue outlook implies free cash flow in line with or exceeding the dividend payout against our previous [free cash flow] forecasts that yield cash returns."
Looking ahead. Ford shares rose 2% to $ 9.42 around 10am on Tuesday, while the broader
S&P 500 index
was up 0.6%.
Jonas noted that he is still not a cyclic bull for cars. He said he is still cautious about American carmakers, but acknowledged that Ford's earnings outlook has changed, "especially in the determination to tackle structural costs as well as changes in global central bank policy."
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