Shares in Ford Motor Company (NYSE:F) inched lower in pre-market trading on Monday after RBC Capital reversed its bullish outlook for the car giant.
Analyst Joseph Spak cut his rating to ‘sector perform’ having been at ‘outperform’ since January, claiming it was “too early” in Ford’s turnaround under its new chief executive to remain conclusively optimistic.
When he struck his bullish note earlier in the year just after the Presidential inauguration, Spak said it was based on expectations of tax reform, earnings improvement and a more attractive production outlook compared with Ford’s rival General Motors Company (NYSE:GM).
But those reforms never came and Ford appointed a new boss in Jim Hackett, which Spak thinks makes the stock more a turnaround story now.
"To that end, we believe new CEO Jim Hackett can get Ford back on an improved track, but it is very early in the turnaround story and specifics are light," the analyst wrote in a note to clients.
"To be frank, aside from some cost-cutting that may be realizable, given the lead times in auto, most of whatever [Hackett] proposes wouldn't have an impact until 2019 or 2020 at the earliest."
Despite the more cautious outlook with his rating, Spak still thinks Ford is undervalued by the markets, choosing to keep his US$13 price target in place for the being.
Shares dipped 0.4% to US$12 in pre-market trade on Monday.