The’s AAP Team Has Mixed Views on Ford

Its June sales jumped 32% from a year earlier. But sales dipped 1.4% from May, and June quarter sales lagged forecasts.’s Action Alerts Plus (AAP) team offered a mixed take on Ford Motor  (F) – Get Ford Motor Company Report, after it reported June sales data.

Sales jumped 31.5% from a year earlier to 152,262 vehicles, with higher-margin trucks and SUVs accounting for 97% of the total.

Electric vehicle sales jumped 77% from a year earlier to total about 2.9% of overall sales.

In addition, Ford gained market share, as sales dropped 11% for the entire industry.

But on a sequential basis, Ford’s sales dipped 1.4% from 154,461 vehicles in May. And for the entire June quarter, its vehicle sales rose 1.8%, trailing analysts’ estimate of 3.3% to 5.1%.

“Supply chain issues that have prompted production delays and shortfalls aren’t a Ford specific event,” the AAP team wrote in a commentary.

“But we also have to acknowledge these headwinds are now being accompanied by recession concerns. The fear is that new car buying will slow, as consumer spending retrenches and interest rates for auto loans [rise].”

Challenging September Quarter for Ford

So Ford will likely “have a challenging September quarter if not the back half of 2022,” the AAP team said.

“Ford has continued to push forward with its transformation, making moves to improve its cost structure and foster its EV efforts,” the team said. “The leverage associated with those efforts will hinge on having enough vehicles flowing through Ford’s operations.”

Ford might have something to show for those efforts in the next 12 to 18 months, the AAP team said. The average age of light vehicles in operation in the U.S. has risen to 12.2 years, according to S&P Global Mobility, the highest level in more than a decade.

“This suggests that eventually we will see a pronounced pick-up in replacement demand, especially if auto sales slow further in coming months,” the AAP team said.

It has a price target of $15 for Ford, which recently traded at $11.19.

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