The
disappointing outlook underscores the higher costs that Ford has
been spending on developing self-driving and electric cars to
keep pace with pioneers like Tesla Inc <TSLA.O>.
The No. 2 U.S. automaker by sales volume is far behind Tesla in
the development of electric car technology. A recent rally in
Tesla's shares have taken its market capitalization to $160
billion, nearly four times that of Ford's valuation, despite
having sales volumes that are less than 10% of Ford.
Shares of the company were down 7.6% at $8.47 in premarket
trading.
Ford forecast 2020 adjusted earnings before interest and taxes (EBIT)
between $5.6 billion and $6.6 billion, largely below at the
midpoint, compared with $6.4 billion in 2019.
"It's not clear to us exactly what is driving the profit
lower...The lack of transparency is not likely to sit well with
investors or inspire confidence," RBC Capital Markets analyst
Joseph Spak said, lowering target price on the stock to $9 from
$10.
Ford also warned of lower profits at its credit arm and higher
warranty costs, but did not provide details.
"Management declined to quantify the impact of the higher
warranty, making it difficult to gauge at the moment how much or
when costs should normalize lower," said J.P. Morgan analyst
Ryan Brinkman, cutting price target by a $1 to $9.
"The 2020 guidance makes it hard for us to see why investors
should get excited about owning Ford stock now," Morningstar
analyst David Whiston wrote in a note.
While 2021 looks promising for Ford due to its 2020 new product
investment, "investors are likely to sit out" until the company
is able to show "sustainable" improvement in its profit, Spak
said.
Ford's adjusted EBIT has fallen for at least two consecutive
years. The company's stock rose about 5% in the past 12 months,
underperforming a 21% increase in the S&P 500 index <.SPX>.
Ford's larger rival General Motors Co <GM.N> on Wednesday
forecast flat profits for 2020, as it kicked off a new effort to
win over investors stampeding into shares of Tesla.
(Reporting by Ankit Ajmera in Bengaluru; Editing by Shailesh
Kuber)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](column_spacer.png)
|
|