Jefferies Upgrades Ford and GM to Buy on Margin and Cash Flow Outlook

Jefferies upgraded both Ford Motor and General Motors to Buy from Hold in a note on Monday, arguing that improving market conditions and strategic adjustments position the Detroit automakers for higher earnings and cash generation over the next two years.

The investment bank sees easing legacy cost pressures and more disciplined capital allocation as key catalysts for both companies.

Ford Positioned for Margin Recovery

For Ford, Jefferies raised its price target to $17.50 from $14.50, suggesting that the company's upcoming second-quarter results will likely mark a "margin trough." The firm expects profitability to improve as vehicle production normalizes following recent supply disruptions.

Jefferies anticipates that Ford's management could raise full-year guidance, supported by several factors:

• Healthy U.S. auto demand
• Improving warranty cost trends
• A more disciplined electric vehicle (EV) strategy
• A reduced manufacturing footprint in Europe

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Reflecting this optimism, the brokerage lifted its 2026 adjusted EBIT forecast for Ford to $10.3 billion, which is near the top end of the automaker's own guidance range. Jefferies also noted that Ford's next-generation EV platform and battery investments should enhance long-term profitability.

GM's Cash Flow Potential Highlighted

Jefferies upgraded General Motors and increased its price target to $99 from $90. The firm's confidence was reinforced by GM's second-quarter earnings, which pointed to continued improvement in profitability and free cash flow through 2027.

The brokerage projects GM will generate more than $10 billion in annual free cash flow starting in 2027. This is expected to be driven by new truck launches, operational efficiency gains, and growing contributions from digital services. Consequently, Jefferies increased its 2026-2028 earnings estimates for GM by approximately 6%.

Jefferies also noted that GM's valuation remains attractive at roughly five times its expected 2027 earnings, with the potential for additional share buybacks to provide further support for the stock.