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The Ford brand is displayed on the gross sales lot on the Ford Retailer in San Leandro, California.
Justin Sullivan/Getty Photos
The auto sector faces a variety of headwinds which can be an excessive amount of for one analyst, who downgraded a few auto shares, together with shares of
Ford Motor
.
The downgrade is hitting Ford inventory.
The inventory fell 4% Thursday to $14.77. The
S&P 500
fell 0.3%, whereas the
Dow Jones Industrial Average
was down 0.7%.
Barclays analyst Brian Johnson is the one who downgraded Ford (ticker: F). His score went to Maintain from Purchase and his worth goal went to $17 a share from $23. It isn’t simply Ford that Johnson is fearful about — he sees dangers to your complete sector from rising rates of interest and inflation.
Inflation raises prices, squeezing revenue margins until greater costs can offset price will increase. Increased automobile costs harm affordability for automotive consumers. Increased rates of interest additionally harm affordability. Most new automotive purchases are financed and better charges enhance month-to-month funds.
Johnson has turned unfavorable on the sector he covers and in addition downgraded shares of components provider
Dana
(DAN) to Maintain from Purchase. He lowered his worth goal on that inventory to $18 from $24.
Johnson nonetheless charges
General Motors
(GM) shares a Purchase, however reduce his worth goal to $59 a share from $68. Johnson charges
Tesla
(TSLA) shares Promote. His worth goal stays $325 a share. Tesla inventory closed Wednesday at virtually $1,046.
Not everyone seems to be as involved as Johnson. Financial institution of America analyst John Murphy elevated his Ford worth goal to $32 from $30 on Wednesday morning. Murphy acknowledges the headwinds, however per unit profitability stays very excessive so he stays optimistic. His 2022 per share earnings estimate for Ford is about $$1.75, up from $1.59 earned in 2021.
Murphy, nonetheless, appears like a little bit of an outlier for now. Total, Wall Road’s enthusiasm for automotive shares is waning. Lower than 50% of analysts overlaying Ford inventory price the shares a Purchase. In the beginning of 2022, the Purchase-rating ratio was 54%.
The average Purchase score ratio for a inventory within the S&P 500 is about 58%.
The Purchase-rating ratio for GM inventory has gone to about 84% from greater than 92% to start out 2022, and the typical analyst price target for shares has dropped to about $70 from $75 a share.
The common analyst goal worth for Ford inventory has really gone up a couple of greenback, to $21 a share, for the reason that begin of the yr.
Buyers appear to acknowledge among the dangers Johnson highlighted. Coming into Thursday buying and selling, Ford inventory has fallen about 26% yr up to now and is down about 41% from its 52-week excessive in January of just about $26 a share.
It would take falling inflation to get analyst and investor sentiment enhancing —and to get Ford inventory rolling once more.
Write to Al Root at allen.root@dowjones.com