Bank of America auto analyst John Murphy recently hosted an investor meeting with management from Ford Motor Company (NYSE:F).
The Pricing Environment: Murphy said Ford's focus remains on transitioning its business to be a market leader in the future auto industry.
One concern investors have about Ford's near-term outlook is the sustainability of its prices. Management admitted that recent supply-demand dynamics are supportive of higher prices, but Ford is taking measures to ensure a balance of inventory levels and product cadence to maintain pricing leverage.
In the longer-term, Murphy said Ford is facing cost pressures related to inflation, but management said the company has plenty of opportunities to rationalize costs and improve efficiencies.
Not surprisingly, Ford management said the company's planned split into Ford Blue for its legacy ICE business and Model e for its electric vehicle business is critical to the company's overall operational success.
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EV Outlook: Ford is still aiming to generate 600,000 units of global EV volumes by 2023 and 2 million units by 2026.
Following the meeting, Murphy said Ford is still very early in its transformation, and there are still a number of unanswered questions at this point.
"Although feedback from the investor meetings indicates that there is much to get excited about for Ford, and the cycle/macro seems to be winding up for a recovery (per BofA), we would note that the long-term structure of the company is still a question mark and will need to be further elucidated over time," Murphy wrote in a note.
Bank of America has a Buy rating and $32 price target for Ford.
Benzinga's Take: While the legacy automakers face many challenges in transforming their legacy businesses, they also have the advantage of having massive, profitable legacy businesses to fund their autonomous and electric vehicle investments. In fact, Ford generated a whopping $17.9 billion in net income in 2021.
Photo courtesy of Ford.
