Morgan Stanley raised its price target for Ford Motor (NYSE:F) to $17 from $16 per share in a note Friday, telling investors that "Detroit's having a gas." The firm maintained Overweight-rated Ford as a top pick.
The investment bank said slower electric vehicle adoption is a positive for the free cash flow outlook and capital return profile for US legacy automakers.
"Following Ford's announcement of a significant recalibration (slower/later) of their EV strategy we make a number of changes to our Ford earnings model that are largely positive and drive a slight increase in our price target," wrote the analysts at the bank.
While Ford has not announced any one-time charges related to yesterday's announcement, Morgan Stanley has assumed in its model a 'bogey' for a $2 billion charge (2Q24) followed by a further $1 billion charge in FY25.
Ford "cut FY24 and FY25 Model e unit volume by a combined 27% vs. our prior forecasts to volume of 118k and 124k units respectively," explained the analysts. "By 2030, we forecast total Ford BEVs (including those within Ford Pro) to account for <7% of total Ford global unit volume."
"We now forecast Model e to post a FY24 Adj. EBIT loss of $4.6bn, less than the low end of management's loss guidance of $5 to $5.5bn," they added. "Our revised Adj. EPS for FY24 and FY25 rises to $1.94 (vs. $1.85 prev) and $2.07 (vs. $1.95 prev) respectively."