(Ford story updated with Ford April sales figures, analyst reaction to the figures and stock price movement.)

Ford ( F) is still generating a mixed bag of reviews after reporting strong first quarter earnings last week and yet another month of sales improvements this week.

Ford Fiesta

The reaction has hardly surprised Ford equity analysts.

"Ford has had a strong run over the past year, so it's not surprising people have locked in profits," Standard & Poor's analyst Efraim Levy told TheStreet. Now "the question is, what will you do for me next?" Meanwhile, Craig-Hallum Capital analyst Steve Dyer said that "it's natural that people would begin to question how much upside is left."

Excluding items, Ford on April 27 posted first-quarter earnings of 46 cents a share, exceeding the 31 cents a share forecast by analysts surveyed by Thomson Reuters.

The next day, Credit Suisse analysts downgraded Ford to underperform from neutral. "We do not think this level of profitability is sustainable," analyst Christopher Ceraso wrote in an investor note. He sees "profit headwinds on the horizon," citing a list of concerns including "rising structural costs, to support global expansion; rising raw material costs; rising incentive costs in the U.S. and Europe; and declining profitability in the finance company."

These headwinds may not be close enough to be seen just yet, but Ceraso predicts that they will show themselves later into the year.

On May 3, Ford reported a 25% increase in April sales, the fifth straight month Ford sales have increased more than 20%.

S&P analyst Efraim Levy said he thinks this is good enough to gain market share, "but we think a slow down from March's 43% is something to watch." He expects to see year-over-year improvement in new light vehicle sales to continue for the rest of the year, but thinks that some monthly comparisons will become more difficult.

Ford stock is up 2.1% at $13.29 in Tuesday trading.

Ford Focus

Another concern for some Ford analysts is that the automakers' future earnings may not be as high as the one just reported because the company has brought on some "very significant products launches," which cost a lot to launch, Edmunds analyst Michelle Krebs said.

Much of these costs, of course, go into retooling the plant in preparation for the launches, which include the upcoming new Ford Focus and new Ford Fiesta. Krebs believes that the return on investment will be high. She calls them "very promising launches." The Ford Fiesta, for example, has by most measures been a successful launch, helping Ford outsell Volkswagen in the first quarter. "Rare even in Europe," Krebs remarked.

"Product launches are expensive, but Ford has been flawless in its recent product launches," she said. "While they've been expensive, they've done them well. For example, Ford has been doing a lot of premarketing for the new Ford Fiesta, and have been taking orders for it for a while already.

Clearly Krebs feels much more positive about Ford in the coming quarters than the Credit Suisse analysts.

"The headwinds are of concern, but my feeling is they're not insurmountable. Some of the concern is over Ford's debt -- I think that's the biggest probably. But I think they can manage it."

Ford has done a strong job in keeping inventory in line with demand. According to Krebs, Ford vehicles took only 51 days to sell to a consumer from delivery to dealerships during the first quarter, which was extremely low. Past quarter averages were about 65 to 80 days.

Ford Taurus

CNW Marketing Research's Art Spinella, like Krebs, is also excited about the new Ford Focus and new Ford Fiesta, declaring them to be a significant improvement over the vehicles they are replacing. "Based on our six-month after-purchase survey, the recommendations to friends and family for those vehicles are so far and away compared to anything that they've had for years and years."

Spinella thinks that Ford has done a terrific job of transforming itself into a fun and modern brand; not just by styling its vehicles in this way, but also by being able to appeal to the youth market, defined as those who are 40 years old and younger.

Ford has been able to do this by, for example, building a presence on social networking sites such as Facebook and mobilizing their users for product promotions. Also, Ford has undoubtedly done "a masterful job selling technology," especially with the Taurus. It's been able to play into "the selling of technology that's appealing to younger consumers," Spinella explained.

The company, instead of selling its new Ford Taurus as, say, a car, decided instead to promote the Sync, voice-controlled, hands-free, in-vehicle entertainment and communications system instead. "Oh, by the way, if you want it, it's in the Ford Taurus," has been Ford's approach to selling the vehicle.

The goal is to appeal to consumers for whom buying cars is not higher on their priority list by tapping into the stuff that they really want, Spinella explained. "In that case, it would be technology today." The last time any automaker adopted this strategy in any significant way was Toyota ( TM), back in the eighties, Spinella said, noting that Toyota had tapped into the "feel good attitude" of the era.

Ford Plant

One note of caution though: whether Ford will have enough inventory to accomodate an upswing in demand. CNW's Spinella disputes such notions, saying that not meeting demand during a demand upswing is "a great thing to be in. So this way, it's always in demand. There's always someone out there to find one.

That's how Harley-Davidson ( HOG) became such an iconic brand, sustaining demand even at high prices, he explained. "Cause they always had a shortage of motorbikes."

S&P's Levy has noted that "even as market share gains are likely to be harder to come by as competitors' difficulties recede into history, we believe Ford has learned the lesson to give profits precedence over market share." He still sees more improvement ahead for Ford, as it and the auto industry should benefit from higher sales volume in both the U.S. and globally for the next several years.

"The industry is still at a massively depressed level, so while we expect increased structural and raw materials costs, we think that a normalization, particularly in North America leaves a lot of leverage yet to be had," Craig-Hallum's Dyer added.

Fitch Ratings said it has upgraded the Issuer Default Ratings (IDRs) for Ford and its captive finance subsidiary Ford Motor Credit to B from B-. Fitch Ratings said its rating outlook for both Ford and Ford Credit remains positive.

Fitch Ratings added that the upgrade of the IDRs and the positive outlook reflect Fitch's expectation that Ford's credit profile will continue to strengthen as the global economy recovers and as the company leverages its increasingly competitive product portfolio and improved cost position to increase production and unit sales.

Also, coupled with Ford's solid price performance, margins are expected to grow over the medium term, driving stronger levels of free cash flow, Fitch said.

Wall Street Strategies' David Silver is still bullish on the stock, but says he believes it will even out sooner or later. "Europe continues to be a problematic area and it does look like the rebound is slowing." At the same time, Silver postulates, "it seems the Street continues to expect the hockey stick type rebound to continue."

-- Reported by Andrea Tse in New York


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