Ford Motor (F) - Get Report shares look set to open at the highest level in more than six years Friday following a price target boost from JPMorgan as the carmaker powers ahead with its electric vehicle investment plans.
JPMorgan analyst Ryan Brinkman lifted his price target on Ford by $2, to $18 per share -- the highest on Wall Street -- while holding his 'overweight' rating in place, citing an improving price mix, stable labor costs and an easing the global shortage in semiconductor supplies.
Last week, Ford said it will boost investment in EVs to at least $30 billion by 2025, and vowed to have 40% of its fleet fully electric within the next decade. Ford also said it would deliver an 8% adjusted profit margin -- a long held goal for the carmaker -- by 2023.
Its larger rival, General Motors GM, said yesterday that it expects its first half earnings to be "significantly better" than previous forecasts as semiconductor shipments improve and plants around the country return to full capacity.
"Ford may not see the same degree of improvement in semiconductor availability in 2Q as GM but we believe it may see some, including after it was reported earlier this week that a fire-damaged semiconductor plant in Japan to which it is disproportionately exposed has nearly returned to full capacity," Brinkman said. "Ford’s outlook may also benefit more from the continued strong pricing environment, given we estimate its management may have been more cautious at the time of 1Q earnings than was GM’s in flowing extremely strong 1Q pricing trends through the full year."
Ford shares were marked 2.6% higher in early trading Friday to change hands at $16.42 each, the highest since March of 2015 and a move that would extend the stock's year-to-date gain to around 85%.
GM shares, meanwhile, bumped 0.6% higher to $63.85 each.
Ford cautioned last month that the ongoing shortage in global semiconductors would cost it around $2.5 billion -- more than double its previous estimate -- and likely last until at least the first half of 2022 after its smashed first quarter earnings forecasts with a bottom line of $3.3 billion, the best in a decade, on revenues of $36.2 billion.
"The new Ford leadership team has really changed the narrative around the company," senior portfolio analyst for ActionAlertsPLUS Jeff Marks. "It used to be a dinosaur in the space, but instead, now they've unleashed some very exciting EV products such as the Ford F-150 Lightning, which had over 70,000 pre-orders as of last week, and the E-Transit Van launching later this year."