) -- If history is a guide, trading in
could be heavy after the automaker reports earnings on Friday.
In a report issued Wednesday, Barclays Capital analyst Brian Johnson said Ford has historically been a big mover on earnings, with a 5.9% average move on its past eight earnings releases. As a result, Johnson notes, "while we continue to like Ford's fundamentals, our colleagues in equity derivatives research also believe February 11 straddles are an attractive way to anticipate the stock being volatile."
For comparison, the average move for the first 57 members of the Standard & Poor's 500 Stock Index to report fourth quarter results has been 3.8%, Johnson noted.
He said that Ford could well beat estimates. "At the same time, anticipating the stock reaction on earnings is difficult as some of the more bullish street expectations are well above consensus, and any 2011 guidance from Ford is likely to be directional and conservative, which could create additional volatility," he said.
The market has come to expect big things from Ford. Shares rose 65% in 2010 after rising 334% in 2009. Shortly after midday Thursday, shares were trading at $18.63, up 26 cents for the day. The YTD gain is about 9%. The Standard & Poor's 500 Index is up about 3% for the month.
For the fourth quarter, analysts surveyed by Thomson Reuters are expecting 48 cents a share, up from 43 cents in the same quarter a year earlier. The full-year consensus expectation is $2.19, up from $2.10 in 2010, which will be Ford's second consecutive profitable year.
Johnson maintains an overweight rating and a price target of $23. However, Credit Suisse analyst Christopher Ceraso has an underperform rating and a $17 price target.
In a report issued Jan. 24, Ceraso increased his earnings estimate by six cents to 52 cents a share, based on increased production and "well-behaved" incentives. He said he anticipates a modest increase in structural and material costs.
-- Written by Ted Reed in Charlotte, N.C.
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