The shares of Ford Motor Company (NYSE:F) was recently downgraded by an analyst at Morgan Stanley, but the automaker’s executive chairman Bill Ford downplayed the bearish conviction.
Reason behind the downgrade
Morgan Stanley analyst Adam Jonas downgraded his rating for the shares of Ford Motor Company (NYSE:F) to Underweight and lowered his price target for the stock to $16 per share. He previously had an Overweight rating and $17 price target for the stock.
The analyst perceived the launching of the new F-150 truck as a potential risk. In his recent note to investors, Jonas wrote, “A risky truck changeover is where we see potential for a blind side.”
Jonas also expressed concern regarding the retooling of the two factories of Ford Motor Company (NYSE:F) in Dearborn, Michigan and Kansas City Missouri might cause unexpected delays, which could hurt the automaker’s profitability. The automaker was retooling both factories to produce brand new aluminum body for the F-150 truck in 2015.
The analyst suggested that Ford Motor Company (NYSE:F) would face compressed margins of the F-150 truck citing the reason that its production involves enormous up-front cost. He also believed that its competitors would immediately implement strategies to protect their market share in the high-margin category in case the new F-150 succeeds. Its rivals cannot afford to delay their response to the F-150, which is a potential game-changer in the truck market.
Ford’s reaction to the downgrade
Mr. Ford expressed optimism regarding the future of Ford Motor Company (NYSE:F). In a recent interview with CNBC, the “There lies an opportunity, how I see it, because we have a lot of new launches coming, a lot of great products. We think they will do very well in the marketplace. I feel very good about our future.”
Ford Motor Company (NYSE:F) is expected to roll out 27 new models this year.In the United States alone, the automaker is set to launch 16 models. The company is selling over 60,000 F-150 truck every month.
When asked about the auto industry in its entirety, Mr. Ford emphasized that there is still room to grow, and Ford Motor Company (NYSE:F) is “running great volumes and expected earnings and margins to increase. According to him, the management feels good about the position of the company whether in terms of margins or market share.
The stock price of Ford Motor Company (NYSE:F) declined 2% following Morgan Stanley’s downgrade. Today, the shares of the company are trading $16.67 per share, slight up at the time of this writing around 1:12 P.M. in New York.