New Ford Motor Price Target After Outstanding $37 Billion Update

Ford Motor (F)  is a "Stocks Under $10" name that we have been long for a while that I don't think we have covered in this column for quite some time. 

I know that I have, in the past, expressed my admiration for CEO Jim Farley. He is a real "car guy" and his enthusiasm for the business is refreshing to see. The shares of both Ford Motor and General Motors (GM)  reacted quite well to their respective third quarter earnings releases over the past two weeks. Stellantis (STLA)  has had a little trouble getting out of its own way, but that's not a legacy U.S. automaker like Ford and GM. GM has kept rallying, but has never been an "SU$10" stock. Ford, on the other hand, has given back some of those gains, but is very much an "SU$10" stock.

Last Thursday, Ford Motor reported an adjusted EPS of $0.45, easily beating Wall Street's expectations. That beat came on revenue of $47.19 billion. That sales print was not only good enough for annual growth of 9.6% but beat Wall Street consensus by more than $3 billion. By the way, that 9.6% sales growth was the fastest pace of year-over-year growth for Ford since Q3 2023. Both Ford and GM had to adapt to the realization that demand for electric vehicles was nowhere near what the so-called "experts" had projected and that while selling EVs could be a real business, they were both sinking far too much capex spending into that misadventure.

Guidance

Ford projected full year guidance for an adjusted EBIT of $6 billion to $6.5 billion and free cash flow of $2 billion to $3 billion after capex spending of roughly $9 billion. That was down from initial adjusted EBIT guidance for $6.5 billion to $7.5 billion and below Wall Street's expectations for something close to $6.9 billion. The reduced guidance was largely due to the Novelis fire and not due to anything related to demand.

During the call, Farley discussed evolving tariff conditions. The CEO said, “Credit based on our large U.S. manufacturing volume will allow us to offset tariffs on imported auto parts we need for our strong American production and manufacturing base.” 

As part of the guidance, tariffs are now expected to be $1 billion 2025 headwind, down from an initial projection of $2 billion.

Most Impressively

When looking at the balance sheet, Ford Motor ran with a cash balance of $32.671 billion that becomes $37.898 billion if longer-term investments are included. As for debt, Ford has $1.056 billion in short-term borrowings on the books and $17.096 billion in long-term debt. Of that long-term debt, $2.728 billion is now labeled as current (maturing within 12 months). These numbers are actually outstanding for a large industrial corporation that often struggles with having to carry large inventories and dealing with expensive labor issues.

The Charts

I see two technical patterns visible on the daily chart of Ford Motor. Both are bullish. ​

​Here we have an ascending triangle of bullish continuation with a $12 pivot. The problem here is that the pivot was lost after it was gained and then retaken. Not sure if the recent breakout can give any credit to this pattern. Now, check this out:

​It's not that clean, but it does look like Ford has an inverted head-and-shoulders pattern of bullish reversal on its hands. This is a more believable pattern to me, but it really doesn't matter if you're not doing the work and just want answers. This pattern also bears a $12 pivot.

Relative Strength is quite muscular without being technically overbought. The daily MACD is very bullishly postured. The histogram of the nine-day EMA is in positive territory. The 12-day EMA is riding above the 26-day EMA with both of those lines in positive territory. These are all short- to medium-term bullish signals. I will be adding to this long position on the recent post-earnings weakness once this article is public information.

Ford Motor (F)

Target Price: $16

Pivot: $12

Add: Down to the 200-day SMA (currently $10.70)

Panic: Loss of 200-day SMA

At the time of publication, Guilfoyle was long F equity.