Ford Motor Co.’s stock experienced a significant boost on Wednesday after surpassing quarterly earnings expectations. Analysts are particularly intrigued by the often overlooked side of the business, Ford Pro, and the optimistic 2024 guidance provided by the company.
Ford Pro: The Hidden Gem
UBS analyst Joseph Spak emphasizes that Ford Pro, the unit focused on fleets and commercial customers, continues to be a hidden gem within the company. This sentiment is echoed by several other analysts, who recognize the unit’s potential.
Promising Projections
Ford Pro guided for earnings before interest and taxation between $8 billion and $9 billion, while their unit focused on traditionally powered vehicles, Ford Blue, expects to generate about $7 billion to $7.5 billion. However, there is a projected loss of $5.0 billion to $5.5 billion for Model E, Ford’s EV unit.
Impressive Performance
Ford Pro’s fourth-quarter revenue increased by 11% compared to the previous year. On the other hand, both Ford Blue and Model E reported relatively flat revenue growth, with only a 4% increase for Model E.
Rave Reviews for Ford Pro
RBC analyst Tom Narayan hails Ford Pro as one of the best businesses in the automotive industry. Its standout performance is evident from its financial results.
Wall Street’s Response
Ford’s fourth-quarter earnings surpassed Wall Street expectations, resulting in positive market sentiment. Despite this, analysts remain cautious about fully endorsing the company’s stock at this time.
Analyst Ratings
Out of the 24 analysts covering Ford, 11 rate the stock as a hold, nine rate it as a buy, and four rate it as a sell.
Future Potential
Although the recent financial success and stock reaction are encouraging signs, consensus estimates suggest that Ford’s execution needs to further improve. Analysts anticipate a rise in estimates and greater confidence in the company’s performance.
Uncertain Road Ahead
While Ford Pro is praised as the automotive equivalent of a Ferrari, questions remain about whether the unit can continue funding losses in Ford’s vertically integrated EV strategy, according to Adam Jonas at Morgan Stanley.
Stock Performance
Over the past 12 months, Ford’s stock has experienced a 7% decline, in stark contrast to the 20% gains of the S&P 500 index SPX.
