Both UBS and Morgan Stanley were neutral on Ford Motor Co (NYSE:F) at the end of September, but one firm upgraded the automaker this week, while the other revised its outlook lower.
F Upgrade: Morgan Stanley upgraded Ford from Equal-Weight to Overweight and announced a $14 price target, citing valuation and preference over General Motors Co (NYSE:GM).
With Ford shares having fallen more than 20% over the last month, Morgan Stanley analysts believe the recent pullback offers an attractive buying opportunity.
The analyst firm noted that Ford's recent profit warning has led to a decline in buy-side expectations, but Ford's valuation is already attractive, trading at just eight times Morgan Stanley's earnings forecast.
Morgan Stanley also expects other automakers to follow in Ford's footsteps and soften expectations, but Ford is better positioned ahead of earnings, having already warned of a supply shortage.
The analyst firm highlighted Ford's potential to be a significant beneficiary of the Inflation Reduction Act, as well as the company's potentially favorable development regarding its restructuring involving Ford Blue.
"In our opinion, the move is far more significant than a mere accounting exercise," Morgan Stanley analysts said.
F Downgrade: On the other hand, UBS downgraded Ford from Neutral to Sell and lowered its price target to $10, citing demand concerns and earnings risks in the face of a potential recession.
UBS believes Ford's European business will continue to face macro headwinds in the near term, which creates an unfavorable risk/reward opportunity.
"Ford has one of the least attractive risk/reward profiles amongst Western OEMs on a 12-month view, which is why we downgrade to Sell," UBS analysts said.
The analyst firm highlighted Ford's strong EV focus, but noted that GM is expected to catch up quickly, complements of its big Ultium-based product line.
Ford recently said it sold a total of 142,644 vehicles in September, consisting of 68,299 trucks, 70,887 SUVs and 4,691 EVs. EV sales were up 197.3% on a year-over-year basis. Ford also said its EV share increased 3.1% to 7% of the total market.
"Ford's EV execution has been solid with a steep sales curve, but GM is likely to catch up fast in 2023," the UBS analysts said.
The Takeaway: Morgan Stanley prefers Ford over GM based on valuation, while UBS prefers GM over Ford based on its EV prospects.
See Also: Ford, General Motors Shares Slide As 'Demand Destruction Seems Inevitable'
F Price Action: Ford has a 52-week high of $25.87 and a 52-week low of $10.61.
The stock was up 1.36% at $11.52 Tuesday morning, according to Benzinga Pro.
Photo: Courtesy of Ford
