Home ETFs Ford Stock Tumbles, GM Slides After Wells Fargo Double-Downgrade

Ford Stock Tumbles, GM Slides After Wells Fargo Double-Downgrade

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Ford Stock Tumbles, GM Slides After Wells Fargo Double-Downgrade

Ford (F) – Get Ford Motor Company Report Shares traded sharply lower on Thursday as its bigger rival General Motors (GM) – Get General Motors Corporation Report It was followed by a rare “double downgrade” by Wells Fargo analysts on U.S. automakers, citing cost and supply chain pressures that would undercut their planned transition to electric vehicle production.

Wells Fargo analyst Colin Langan halved his price target on Ford to $12 a share and downgraded his rating by two notches to “underweight” from “equal weight”, noting that the automaker needs to “grow more” Investing in supply chain to ease price concerns,” which could impact production of its iconic F-150 Lightning electric pickup.

Ford said last month that pricing power and strong demand, especially for its just-launched F-150 Lightning, would offset supply constraints and the impact of Russia’s war in Ukraine, as it stuck to its full-year operating profit forecast. between $11.5 billion and $12.5 billion.

However, CEO Jim Farley said the automaker’s “primary focus now is to accelerate more fundamental changes in our supply chain management”, adding that he is absolutely committed to improving our growth, profitability and The ability to generate sustainable cash flow to unlock value from our automotive-related businesses. “

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Langan also downgraded GM by a double, “underweight” the automaker and cut its price target by 55%, currently at $33 a share, citing similar cost concerns associated with the shift to electric vehicle production.

Nickel prices, a key component of battery production, are up 33.8% so far this year on the London Metal Exchange to around $27,700 a tonne, while battery-grade lithium carbonate prices are up about 60% from levels at the start of 2021.

The analyst also pointed to concerns about wage growth as the group embarks on negotiations with the UAW over a new labor deal for the coming year.

In fact, earlier this week, GM struck a new contract with Mexico’s independent SINTTIA union, which has a 20-year CPI at its highest level in 20 years, and union officials said the contract “includes a package of pay inflated economic welfare”. “

Ford shares fell 4.75% in premarket trading, signaling an opening price of $12.22 a share, a move that would extend the stock’s year-to-date decline to around 41.7%. Meanwhile, GM shares fell 5% to $35.41 a share.

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