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Citi Upgrades Ford to 'Buy' on F-Series Momentum, Lifts Price Target to $20
Citi has upgraded its rating on Ford Motor Co. (NYSE: F) to 'Buy' from 'Neutral,' citing a brightening outlook for the automaker's profitability driven by stronger F-Series truck production and easing cost pressures. The investment bank also raised its 12-month price target on the stock to $20 from a previous $19.
Key Catalysts for the Upgrade
Analysts at Citi pointed to several positive developments supporting their more optimistic view. They expect second-half production of the profitable F-Series lineup to increase by approximately 28%, supported by the resolution of a prior aluminum supply disruption. This normalization is expected to drive improved profitability.
Additionally, the bank anticipates a significant reduction in cost headwinds. Warranty accruals are forecast to decline by $1.5 billion for the full year, following a nearly $1 billion year-over-year drop in the first half. Citi also highlighted Ford's growing non-automotive revenue, with subscription services increasing 20% annually to 1.6 million in the second quarter, providing potential for higher-margin income.
Revised Earnings Forecast
The upgrade follows Ford's strong second-quarter performance, where it reported adjusted earnings per share of $0.42, beating the FactSet consensus estimate of $0.36. The automaker also raised the midpoint of its full-year guidance by $1 billion.
AdReflecting this momentum, Citi has increased its own earnings forecasts for Ford:
- 2026 EPS: Raised to $1.90 from $1.75
- 2027 EPS: Increased to $2.10
- 2028 EPS: Increased to $2.30
Valuation and Market Context
Citi's new $20 price target is based on applying the upper end of Ford's historical valuation multiples from 2015-2019 to its higher earnings estimates for 2027-2028. The bank noted that Ford's stock has been relatively 'out of favour' among Wall Street analysts compared to rival General Motors, suggesting the positive operational shifts are not yet fully reflected in its share price.
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