Updates from 12:43 p.m. EDT

Shares of

Ford

(F) - Get Report

were up more than 5% Tuesday following an announcement that its former vice chairman will rejoin the company as chief financial officer and subsequent analyst praise.

On Monday, Merrill Lynch raised its recommendation on Ford to strong buy from neutral, putting a $24 price target on the stock and saying the automaker is "working its way through the most difficult stage" in its restructuring, and has a "credible and achievable plan" and a favorable risk/reward ratio.

The upgrade follows a management change at Ford on Monday: Martin Inglis, who was CFO for less than a year, will be replaced by Allan Gilmour, who retired from Ford in 1995 after 34 years.

"Recent management appointments should enhance investors' confidence in Ford's restructuring plan and increase its likelihood of success," said John Casesa, an analyst at Merrill Lynch, in a note.

The latest appointment follows the ouster of chief executive Jacques Nasser in October. William Ford has since taken over the reins, making new appointments as he struggles to restore profitability. In the first quarter, Ford lost $800 million, and the automaker has seen its market share slip.

Back in January, Ford announced a back-to-the-basics restructuring program, which included the closing of least five plants to reduce capacity by 16% and raising $3 billion to shore up its balance sheet.In mid-May, Ford said it was on track to meet its goal of reducing cost per vehicle by $700 by 2005.

In a research note, Merrill Lynch analyst John Casesa touted Ford's liquidity -- the automaker has $21.5 billion in automotive cash and an over-funded U.S. pension plan -- and said its product pipeline, which is "lean now," should improve in two years. He also said Ford's valuation was appealing.

Casesa expects Ford to reach peak earnings of $3 a share and a peak price-to-earnings multiple of 10 in 2007, based on assumptions for volume growth, at which point the stock would trade $30. It closed Tuesday at $17.58, up 85 cents, or 5.1%.

"Discounting $30 in 2007 at the risk-free rate of 4.5% implies a fair value today of $24," he said.

Still, Casesa pointed to risks in his outlook: "Ford's fundamentals are unlikely to get much worse, but it faces difficult quarters into next year," he said. "For this reason, we run the risk of being early."

Starting in 2003, Ford is assuming market share of 19% for its "Blue Oval" brand in the U.S. But since its share is down to 17.3% year-to-date from 19% in 2001, it may miss its target, Casesa said.

Further, the Canadian autoworker's union (CAW) has made several comments vowing to oppose the planned closing of Ford's Ontario truck plant. "Since some CAW plants make components that are shipped to other Ford facilities, a strike could shut down much of the company's North American operations," Casesa said, though he added that the market tends to look through such events.

Finally, Casesa said an industrywide rise in personal bankruptcies was a risk to Ford Credit.