In a research note to investors this morning, Jefferies analyst Philippe Houchois upgraded Ford Motor (F) to Buy as he believes the company is getting no credit for its "ambitious but credible" cost targets and "strategic levers" to improve market and product exposure.
BUY FORD: Jefferies' Houchois upgraded Ford Motor to Buy from Hold and raised his price target on the shares to $14 from $13. The analyst told investors that despite being "perceived a laggard," Ford is early among global automakers in re-evaluating how it allocates capital, a process most vehicle manufacturers outside of North America have yet to address. Furthermore, Houchois believes the carmaker is getting no credit for its "ambitious but credible" cost targets and for "multiple operating and strategic levers" still available to improve market and product exposure. While noting that rarely has he seen an Original Equipment Manufacturer, or OEM, generate so little passion, the analyst pointed out that Ford's balance sheet strength stands out, which he believes will be a "critical factor" to implement mobility businesses. Only Ford and BMW (BMWYY) stand out in his coverage with a combination of strong liquidity and well-funded employee obligations, he said. Additionally, Houchois argued that he expects Ford to retain a global presence with more selective exposure and joint investments in Europe and Latin America with other OEMs, possibly Fiat Chrysler (FCAU) and PSA given their similar challenges. Rather than exiting car segments, Ford is accelerating the repositioning of cars into crossovers and electrified vehicles, he contended, adding that in both cases, the company's overall risk profile should remain below peers. Ford is Houchois' top pick among U.S. car manufacturers.
PRICE ACTION: In morning trading, shares of Ford are fractionally up to $11.52.
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