The new year could bring some more losses for Ford Motor , according to Jefferies. The investment bank downgraded shares to underperform from hold and cut its price target by $3 to $9, implying more than 13% downside potential. This comes as shares of the automaker have slumped nearly 15% this year and more than 5% over the past month. On Monday, the stock fell almost 2% during premarket trading following the call. F YTD mountain F, year-to-date Although there could be some "mild relief" for the company with possibly loosened emissions regulations under President-elect Donald Trump, analyst Philippe Houchois cited concerns of inventory overhang as a key concern ahead. "De-stocking has become an overhang with US inventory drifting up to 96 days (+1 in November, 26/18 days above GM/STLA) in spite of solid US sales +15% (+4% ytd)," the analyst wrote to clients on Monday. "Sustained production supports the reduced 2024 guidance but suggests a more difficult start to 2025." Along with that, Houchois said Ford faces several other challenges, such as resizing its presence in Europe or exiting the region entirely as well as a growing gap between its warranty provisions and cash outflows over the past few years. "The balance sheet is robust rather than strong and potential claims from restructuring and warranty leave little cash for shareholders if Ford wants to maintain a conservative financial profile," he also said. Another worry for Houchois is valuation. "Ford's valuation premium has eroded over time but shares continues to trade at a premium to GM, we assume because of a greater potential for improvement even after a few false starts. On our 2025 estimates, Ford is trading on 3.7x adj EBIT, 6.2x earnings and FCF yield of 9," he said. The majority of Wall Street has taken a more neutral stance on the name. While Houchois' call is among the four out of 26 total analysts covering it who have an underperform or sell rating, 16 have a hold rating, according to LSEG data. Even still, its average target of $11.63 actually reflects about 12% upside from its latest close.
