Ford Stock Dips Pre-Market After Jeffries Downgrade On 'More Difficult Start' To 2025: Retail Mood Dims
By Stocktwits Inc | First Published Dec 16, 2024, 7:01 PM ISTAnalyst Philippe Houchois noted that U.S. inventory levels had risen to 96 days by November, significantly above competitors General Motors and Stellantis.
Shares of Ford Motor Co. fell nearly 2% premarket Monday, heading toward a potential four-month low, after Jefferies downgraded the stock to ‘Underperform’ from ‘Hold.’
The firm also slashed its price target from $12 to $9, citing challenges that could weigh heavily on the automaker heading into 2025.
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Jefferies analyst Philippe Houchois highlighted concerns about inventory overhang, noting that U.S. inventory levels had risen to 96 days by November, significantly above competitors General Motors (GM) and Stellantis (STLA).
This rise in inventory comes despite a 15% growth in U.S. sales during November and a 4% year-to-date increase.
Houchois suggested that Ford’s sustained production while supporting its lowered 2024 guidance, may lead to a tougher start in 2025.
Houchois expressed concerns about Ford’s broader challenges, including the automaker’s struggle to resize or potentially exit its European operations and ongoing discrepancies between warranty provisions and cash outflows.
He argued that these issues, coupled with valuation concerns, could leave Ford vulnerable.
While its valuation premium over GM has declined over time, Ford still trades at a higher multiple, reflecting misplaced expectations for improvement despite repeated missteps.
On 2025 estimates, Ford trades at 3.7x adjusted (full form) EBIT, 6.2x earnings, and a 9% free cash flow yield, which Houchois believes limits the stock’s upside.
Retail sentiment around Ford turned more ‘bearish’ on Stocktwits, where the stock ranked among the top 15 trending symbols before the market opened.
Users expressed skepticism, with one commenter predicting the stock would struggle to remain above $10 through year-end.
Another user said the stock might not jump significantly without a “huge catalyst” or a new CEO.
Jefferies is not the only firm sounding an alarm on Ford. Wolfe Research last week flagged significant downside risks for the automaker in 2025, which is expected to be a difficult year for the industry as a whole.
Wall Street analysts project Ford’s operating profit will decline to $9.7 billion in 2025, down from an estimated $10 billion this year. In 2023, it was $10.4 billion.
Ford’s stock has declined about 14% year-to-date, underperforming broader markets, as analysts and retail investors remain cautious about its prospects.
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