Text dimension
Ford autos are displayed on the gross sales lot at Serramonte Ford in Colma, California.
Justin Sullivan/Getty Images
Price targets for
Ford Motor
and
General Motors
have been coming down these days, and one other analyst simply made cuts. That’s not nice information for automotive traders, however Ford inventory, specifically, could be due for a pop anyway.
Citi analyst Itay Michaeli took his Ford (ticker: F) inventory value goal to $15 a share from $18. His General Motors (GM) inventory value goal was lowered to $87 a share from $98. Michaeli charges Ford inventory Hold. He is extra bullish on GM, ranking shares a Buy.
A automobile density survey that the analyst has performed for 12 years or so is the explanation. Michaeli tries to forecast the route of cars-per-household within the U.S. That helps him venture demand for vehicles in upcoming years.
The newest survey wasn’t all that dangerous, however it was much less bullish than latest surveys. “We’re seeing a tale of two stories: (1) A visibly negative macro impact across certain age groups and regions; (2) An offsetting force likely from de-urbanization,” wrote the analyst. Macro elements that affect car-buying choices embody fuel costs and monetary situations like the extent of rates of interest.
There are two tales embedded within the analysts’ cuts too. He remains to be bullish on auto shares, regardless of his cuts. He calls GM inventory his prime choose. And he opened what he calls a 90-day catalyst watch on Ford inventory.
“We believe that the results of our 2022 Density survey paint a considerably better picture of the U.S. auto cycle than current consensus thinking today,” added Michaeli in his report. “If U.S. auto data points indeed prove reassuring in the coming months, we think sentiment in Ford shares can improve.”
So issues aren’t all that dangerous and quite a lot of dangerous information already is mirrored in Ford inventory nowadays. Shares have declined about 34% this 12 months and are down nearly 50% from their 52-week excessive in January of virtually $26.
GM inventory hasn’t fared significantly better. Shares have dropped about 34% in 2022. GM shares are off about 42% from their 52-week excessive in January of greater than $67.
Both shares had been roughly flat in premarket buying and selling Wednesday.
S&P 500
and
Dow Jones Industrial Average
futures had been up 0.2% and 0.4%, respectively.
Investors seem like inured to the cuts. Over the previous three months, the common analyst value goal for GM inventory has dropped to about $62 a share from roughly $74. The common analyst value goal for Ford inventory has gone to simply beneath $19 a share from about $22.
Between Ford and GM, GM inventory is extra fashionable on Wall Street. About 42% of analysts protecting Ford charge shares Buy. About 81% of analysts protecting GM charge shares Buy.
The common Buy-rating ratio for shares within the S&P 500 is about 58%.
Write to Al Root at allen.root@dowjones.com