Ford Motor Company (NYSE:F) shares dropped nearly 10% Friday on the heels of disappointing third quarter results and a tentative deal with the United Auto Workers to end its strike.
Ford reported adjusted earnings of $0.39 per share on revenue of $41.18 billion, missing Street expectations of $0.45 per share on revenue of $41.22 billion.
Following the results, Bank of America analysts cut their price target for the stock to $19 from $23 while reiterating a Buy rating.
“The miss was driven by lower-than-expected volume in Pro [commercial division] and heavier losses in Model e [electric vehicle division],” the analysts wrote. “Ford highlighted that Pro volumes were negatively affected by supply chain disruptions, but that order backlog is still strong.”
Notably, Ford announced Thursday that it would cut its EV investment plans by US$12 billion, citing customers’ refusal to pay a premium for EVs as the reason.
“Ford mentioned that EVs are still in high demand, but that price pressure is pervasive, the analysts wrote. “Ford affirmed that prices have declined faster than initial expectations, which are forcing the company to take a more aggressive approach to cost cutting.”
Ultimately, BofA is bullish in the long term.
“We believe the company has a long way to go, but combined with a strong near-term product cadence (especially Super Duty) we expect management will likely make great strides,” analysts wrote. “Therefore, we reiterate our Buy rating.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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