Written by Brenda Nakalema

Ford gets downgrade but strong deliveries get stock up

The numbers coming out of Ford Motor Company recently seem to point to the fact that all the effort the …

The numbers coming out of Ford Motor Company recently seem to point to the fact that all the effort the company has put into recovery after the pandemic is finally begining to pay off. Ford posted impressive numbers that have had analysts buzzing- its November delivery numbers show a stellar performance this quarter. Despite this exciting news, the company’s stock received a downgrade on Thursday.

Rod Lache, a Research analyst at Wolfe, downgraded Ford (ticker: F) from Buy to Hold but raised the target for the stock price from $17 to $22. Relative valuation seems to be the biggest reason for the change.

Ford stock was up about 123% since the start of 2021, and coming into Thursday trading, shares were up 80% since Lache upgraded them back in April. On the other hand, General Motors stock (ticker: GM) is up 45% year to date.

On Thursday, Lache commented that he now has a preference for GM stock, which he rates at a Buy and has a target price of $86. This vote of confidence seems to be having a positive effect on GM since it was up 3.2% to $59.93 in early trading.

Ford stock remained strong despite the downgrade, rising 0.9% to $19.77. The S&P 500 and the Dow Jones Industrial Average were up 0.6% and 1.1%, respectively. Ford’s positive November sales news might have influenced Lache to raise his price target eventually.

On Thursday, Ford said that its vehicle deliveries in the U.S for November stood at 158,793, a 5.9% jump from the figures it posted in the same time period last year. Year to date, Ford has delivered roughly 1.7million vehicles in the U.S, a decline of about 5.6% when compared to the same time period in 2020.

One of the key bottlenecks to stable growth has been the semiconductor shortage that wreaked havoc across the entire global automobile industry. Despite how long its taken for companies to find viable solutions to the semiconductor shortage, Ford’s current performance is evidence that the worst might be finally behind them.

Key among Ford’s high sellers are its trucks that have been known to outperform its other vehicles in terms of sales. Since the beginning of 2021 to date, the Ford F-150 has held its position as America’s best selling truck- a position it has held for the past 45 years.

After the downgrade, most analysts covering Ford stock rate its shares at Buy, which is in alignment with the average Buy- rating ratio for stocks in the S&P 500. The average price target is $20, which incidentally is where shares are currently trading.