Can Ford Keep Its Momentum Going?
NEW YORK (TheStreet) -- The price of Ford (F) - Get Report stock reached a five-year high Thursday after Moody's Investors Service boosted Ford and Ford Motor Credit ratings. But can it keep up this momentum?
Ford Fiesta
Many equity analysts think Ford still potential to do so, despite being up against the weakened, but still formidable rival
Toyota
(TM) - Get Report
; yet offer some cautionary notes. Ford stock hit an intraday high of $14.15 a share Thursday, up 4.9%, and reaching levels not seen since January 2005.
"One of the reasons I liked Ford so much about a year ago was its new product lineup and that hasn't changed," Wall Street Strategies analyst David Silver says. (Both Silver and members of his family own Ford stock.)
"If anything," Silver continues, "the success of some of the new vehicles has surpassed even my expectations. Also, the auto market in North America continues to improve, and while there are going to be up and down months, it is better than last year. Stronger sales coupled with the improving cost structure bode extremely well for Ford in the coming quarters....
General Motors
indicated it could earn a profit during 2010, and if that is true, then Ford will be even stronger."
2010 Ford F-150
Silver believes that if Ford continues to maintain its momentum from the past few months, it could end up taking and holding the dominant position domestically, while Toyota could be overtaken by
Volkswagen
(VLKAY)
as the largest automaker in the world this year.
Silver adds that Ford has also been making significant inroads into the international markets, including the Western Europe. "It is a struggling market -- or will be when government incentives end -- but it is taking market share, and really profiting from the struggles with Toyota and
GM's Opel," Silver says. He believes that Ford's future in the international markets lie in India, Brazil and to a lesser degree, China.
Still, Morningstar analyst David Whiston offers a cautionary tale. "It will take a long time for the company to regain market share in the United States, as consumersare still very loyal to Japanese and European brands," Morningstar analyst David Whiston notes.
"Detroit automakers continue to rely on pickup trucks and sport-utility vehicles for profits, but recent higher fuel prices have changed the industry," Whitson notes. "Since 2003, the U.S. truck/car mix has transitioned to 45%/55% from 54%/46%, while Ford continues to get over 60% of its U.S. sales from trucks. Ford's management realizes the need to sell more cars, as gas prices will probably rise again and Toyota and
Honda
(HMC) - Get Report
continue to push into light trucks."
Ford's total U.S. market share is roughly 16%, in comparison to more than 20% in 2003, according to Morningstar.
-- Reported by Andrea Tse in New York
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