Ford Stock Price Forecast October 2021 – Time to Buy F Stock?

Ford (F) stock gained 4% yesterday and took its year-to-date gains to over 88%. The stock has been strong over the last month and has recouped the recent losses.

F stock is now getting near the 52-week highs that it hit earlier this year. What’s the forecast for Ford stock and can it continue its good run?

F stock technical analysis

Ford stock is looking bullish on the charts. The stock crossed above the 50-day SMA (simple moving average) late last month and has since been in an uptrend, hitting higher highs. Ford stock also trades above the 100-day and 200-day SMA as well as the short-term moving averages like the 10-day, 20-day, and 30-day SMA. The 12,26 MACD (moving average convergence divergence) also gives a buy signal. However, after the steep rise in the last few trading sessions, F stock now looks overbought with a 14-day RSI (relative strength index) of 72.5. RSI values above 70 indicate overbought positions.

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Ford third-quarter earnings

Ford would release its third-quarter earnings later this month. Tesla released its third-quarter earnings after the close of US markets yesterday and posted record revenues and profits. This is the eighth consecutive quarter when the Elon Musk run company has posted a net profit. Notably, while other automakers are grappling with the chip shortage situation, Tesla continues to churn out cars at a record pace and its annual run rate is now almost 1 million cars.

Coming back to Ford, the chip shortage situation has taken a toll on its financial performance. Analysts polled by TIKR expect the company to post revenues of $32.6 billion in the third quarter, 5.9% lower than the corresponding quarter last year. The company’s adjusted EPS is expected to fall 60% to $0.26 in the quarter. While higher input and labor costs would drag down the company’s profitability, the biggest hit might come from the production bottlenecks caused by the chip shortage situation.

What to watch in F’s earnings call?

During Ford’s third-quarter earnings call, the management’s commentary on the chip shortage situation and the guidance for the fourth quarter and beyond would be the key metric to watch. Also, the company might provide more details about its electric vehicle plans.

Last month, Ford said that along with SK Innovation, it will invest $11.4 billion towards EV and battery plants. Notably, the battery is the most important hardware element of an electric car. A higher battery range helps increase the range and also acts as a competitive advantage. During the earnings release, the company might offer more details on the partnership.

Ford stock target price

Meanwhile, Wall Street analysts look bullish on F stock ahead of its earnings. Yesterday, Credit Suisse upgraded the stock from neutral to outperform and raised the target price by $5 to $20. In its note, Credit Suisse said that “in the past year +, we’ve seen a significant turnaround underway at Ford – it has ended its cycle of quarterly earnings disappointments, and its transition to an EV/digital world has sharply accelerated.”

Notably, under the leadership of Jim Farley, Ford has been transforming its business to focus on profitable markets and models. It has also made an aggressive pivot towards electric vehicles.

According to Credit Suisse, “We more importantly see opportunity in the ‘far,’ with potential to improve perception on Ford’s long-term positioning in EV and AV. … The F-150 Lightning launch next spring could be a catalyst.” Notably, the F-150 would be available next year and Ford has said that it has over 150,000 reservations for the model, and a lot of them have come from first-time buyers.

F stock forecast

Wall Street analysts have a mixed forecast for F stock. It has received 13 buys, eight holds, and one sell rating from the analysts polled by CNN Business. The stock has a median target price of $17 which is a premium of 5.9% over current prices.

Ford stock long term forecast

The long-term forecast for F stock looks bullish as it transforms into an electric car maker. The one thing that may work in favor of companies like Ford is the manufacturing expertise and an established sales and service network. Many of the startup EV companies have faltered on the execution part. However, with decades of manufacturing experience under the belt, legacy automakers score above startup EV companies.

Should I buy F stock?

F stock looks like a buy looking at its strong growth outlook and the focus on profitability. The stock trades at an NTM (next-12 months) PE multiple of around 10.6x which looks quite reasonable. Also, while currently, the company is not paying a dividend, it might reinstate the dividend. Overall, at these prices, Ford is one stock that should be on your radar in October 2021 as the world transitions towards green energy.

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