Why this Ford stock bull sees the price ripping 40% higher

The Ford stock bulls on Wall Street are out in full force after the auto giant uncorked a major business model overhaul earlier this week.

The automaker announced it would create two distinct internal teams: Ford Blue and Ford Model e. The maneuver is designed to free up resources so Ford could better attack the opportunity in EVs.

Ford Blue — essentially the company’s gas-powered auto business — will be focused on managing profits. That means attention to lowering costs, and plowing those savings into the EV Ford Model e division.

“The split has strong industrial logic as BEV & ICE [battery electric vehicle/internal combustion engine] operations should have different operating metrics. It also enables investors to perform a sum of the parts valuation (SOTPs) on ICE & BEV assets; ICE profits are currently diluted by BEV losses, which we estimate are at least ~$1.5 billion in 2022,” said Wells Fargo auto analyst Colin Langan in a new note on Thursday.

Langan put out a $26 price target on Ford shares, projecting potential upside from current levels of about 40%.

Ford stock fell 3% Thursday to $17.30, a day after it popped more than 5% as the Street embraced the pivot by the company. Shares remained among the five top trending tickers on the Yahoo Finance platform through early afternoon.

The automaker further outlined $3 billion in cost savings from Ford Blue by 2026.

Ford expects to produce 2 million EVs by 2026. It sees an adjusted operating profit margin of 10% by 2026, up 270 basis points from 2021.

In total, Ford guided to a $50 billion in EV investment through 2026.

“We are going all in,” Ford CEO Jim Farley told analysts.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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