Ford Shares Drop 6% as Weak 2025 Outlook Dims Strong Q4 Performance

Goldman Sachs pulled back its bullish stance on Ford (NYSE:F), downgrading the stock from Buy to Neutral and lowering the price target to $9 from $11. As a result, the company’s shares dropped more than 3% on Thursday.

The move reflects growing concern over the automaker’s earnings outlook and macroeconomic challenges.

The firm acknowledged that its previous optimism on Ford’s cyclical momentum was misplaced. Since being added to Goldman’s Buy list in September 2024, Ford’s projected 2025 earnings per share have been slashed by 32%, outpacing the stock’s 10% decline over the same period.

Goldman notes that while the share price has held up better than earnings revisions might suggest, this could be due to improved investor sentiment, successful cost-cutting initiatives, and Ford’s domestic manufacturing presence that may help cushion the impact of rising tariffs.

Despite some positives—such as Ford’s progress on expense management and its positioning in the U.S. for potential tariff-related advantages—Goldman now sees a tougher environment ahead. The firm points to increasing global competition, softening consumer demand, and the likelihood of escalating costs from new tariffs as factors weighing on Ford’s ability to regain traction.

Goldman still sees potential in Ford’s long-term push into software and services, but the timing of that transformation remains uncertain. Without clear signs of a near-term earnings inflection or stronger cyclical recovery, the firm has chosen to step to the sidelines, citing an unfavorable risk-reward balance at current valuation levels.

Ford Motor (NYSE:F) was hit with a downgrade by Bernstein SocGen Group, which adjusted its rating on the stock from Market Perform to Underperform and slashed its price target from $9.40 to $7. The move reflects growing anxiety over the impact of recently implemented vehicle tariffs and the likelihood of additional tariffs on auto parts in the near future.

Bernstein's latest analysis indicates that these trade policy shifts could deal a substantial blow to Ford’s financial outlook. The firm estimates a more than 35% hit to free cash flow, while adjusted earnings projections for 2025 and 2026 have been sharply reduced—by over 41% and 36%, respectively.

Beyond the direct cost of tariffs, the downgrade also factors in a broader deterioration in consumer sentiment, which could weigh on vehicle demand. As the economic and political environment becomes more volatile, Bernstein believes the current valuation fails to fully reflect the downside risks Ford is facing.

With the stock already underperforming and trade-related pressures building, Bernstein expects further weakness and advises investors to brace for a rougher road ahead.

Ford Motor Company, trading under the symbol "F" on the NYSE, is a major player in the automotive industry, known for its wide range of vehicles, including cars, trucks, and SUVs. The company faces competition from other automotive giants like General Motors and Toyota. Recently, Piper Sandler updated its rating for Ford to Neutral, maintaining a hold action, with the stock priced at $10.25.

The stock's current price reflects a 2.5% increase, translating to a gain of $0.25. Throughout the day, the stock fluctuated between $10.01 and $10.25. Over the past year, Ford's stock has seen a high of $14.85 and a low of $9.06. The company's market capitalization is approximately $39.9 billion, with a trading volume of 102.6 million shares.

Ford is currently under scrutiny as federal regulators investigate approximately 1.3 million Ford F-150 trucks from model years 2015 to 2017. The National Highway Traffic Safety Administration (NHTSA) has received 138 complaints about these vehicles unexpectedly downshifting at high speeds, leading to rapid deceleration and potential crashes.

This investigation follows Ford's recent recall of over 240,000 Explorer models due to improperly secured seatbelts. The F-150 probe highlights significant safety concerns, as this model is one of Ford's most popular. The sudden downshift issue can cause the rear wheels to lock temporarily, complicating vehicle control and increasing the risk of accidents.

• RBC Capital maintains a "Sector Perform" rating for Ford (NYSE:F), with a current stock price of $10.22.
• Ford is expected to report a fourth-quarter earnings increase to 33 cents per share and a slight revenue growth to $43.25 billion.
• Despite a positive earnings outlook, Ford's stock was downgraded by Jefferies analyst Philippe Houchois from Hold to Underperform, indicating a cautious stance.

On February 5, 2025, RBC Capital maintained its "Sector Perform" rating for Ford (NYSE:F), advising investors to hold the stock. At the time, Ford's stock price was $10.22. This recommendation comes as Ford prepares to release its fourth-quarter financial results, which are highly anticipated by analysts and investors alike.

Ford Motor Company, a major player in the automotive industry, is expected to report earnings of 33 cents per share for the fourth quarter, up from 29 cents per share in the same period last year. The company is also projected to announce quarterly revenue of $43.25 billion, slightly higher than the $43.21 billion reported a year ago. Ford has a track record of exceeding analyst revenue estimates, having done so in eight of the last ten quarters.

Despite the positive earnings outlook, Jefferies analyst Philippe Houchois recently downgraded Ford's stock from Hold to Underperform, suggesting a more cautious stance. This downgrade contrasts with RBC Capital's recommendation to hold the stock. Ford's stock has shown some volatility, with a recent 2.7% increase, closing at $10.16, and currently trading at $10.22, reflecting a 0.60% increase.

Ford's stock has experienced fluctuations over the past year, reaching a high of $14.85 and a low of $9.49. The company's market capitalization is approximately $39.90 billion, with a trading volume of 54.37 million shares. As Ford prepares to release its financial results, investors will be closely watching for any developments that could impact the stock's performance.

Jefferies analysts downgraded Ford (NYSE:F) from Hold to Underperform, cutting the price target on the stock to $9 from $12. As a result, shares fell more than 3% intra-day today. The move reflected growing concerns over inventory management, strategic uncertainties, and cost pressures that could weigh on the automaker’s near- and long-term performance.

While a potential loosening of emissions regulations under a Trump administration offered some relief, the timing and scope of such changes remained uncertain. Meanwhile, Ford’s inventory levels continued to rise, reaching 96 days in November—26 and 18 days higher than General Motors and Stellantis, respectively—despite a 15% year-over-year increase in U.S. sales. The analysts noted that sustained production has supported the company’s reduced 2024 guidance but could make for a more challenging start to 2025.

Ford also faced critical strategic decisions in the coming quarters. These included the potential need to resize or exit its European operations, which currently contribute about 25% to its 2024 earnings per share. Additionally, the company’s yet-to-be-announced electrification strategy may focus on range-extender vehicles (EREVs), further complicating its EV roadmap. Persistent structural cost issues, combined with an $8.5 billion gap between warranty and quality provisions and actual cash outflows since 2020, added to the pressure.

The analysts highlighted that while Ford’s balance sheet was solid, it offered limited flexibility. Restructuring and warranty-related claims could leave little room for shareholder returns if the company aimed to maintain a conservative financial profile.

Goldman Sachs analysts upgraded Ford (NYSE:F) to a Buy, citing strong margin potential from its growing software and services business, particularly through its commercial arm, Ford Pro.

The investment bank expects software and physical services to account for 20% of Ford Pro’s EBIT by 2026, with paid software subscriptions expanding at an annual rate of 35-40%. Ford is targeting $1 billion in software revenue by 2025, driven by improvements in fleet services and advanced driver assistance systems (ADAS).

Goldman also highlighted Ford's cost-cutting efforts in both internal combustion engine (ICE) and electric vehicles (EVs) as key to offsetting industry challenges like slower demand growth and increased competition from Chinese automakers.

While Ford shares have dropped 13% year-to-date due to cyclical concerns and higher-than-anticipated warranty costs in early 2024, Goldman sees a 23% upside to its new 12-month price target of $13. The stock is currently trading at 5x next twelve months (NTM) EPS estimates, at the lower end of its historical valuation range.