Ford Motor Company’s stock price fell on Monday after being downgraded by Jefferies analysts. The firm lowered its rating to “underperform” from “hold,” citing concerns over the carmaker’s inventory backlog and costs associated with restructuring and warranty payments.
The analysts warned that Ford needs to address its swollen inventory, which has risen to 96 days despite solid sales. They also expressed concerns about the company’s balance sheet, stating that it is not as strong as initially thought. The Jefferies team believes that potential claims from restructuring and warranty payments will leave little cash for shareholders if Ford wants to maintain a conservative financial profile.
The downgraded rating and lower price target of $9 are a result of these concerns. This move comes at a time when emissions standards may be relaxed under the new Trump administration, but analysts see it as insufficient to offset the inventory issues. General Motors, a rival carmaker, remains on Jefferies’ radar with its “hold” rating and higher price target.
The news follows Ford’s 18% year-to-date decline in stock value, while General Motors has seen a more significant gain of over 40%.
Source: https://www.investopedia.com/ford-stock-falls-after-jefferies-analyst-downgrade-gm-8762064