Jefferies analyst Philippe Houchois raised his price target on Ford Motor Co. to $9 from $8 while reiterating an Underperform rating, pointing to tariff exposure, ongoing electric-vehicle losses, and a cautious stance on valuation.
In a new assessment, he noted Ford’s full-year net tariff guidance of about $2 billion, which he said is broadly in line with Stellantis at roughly $1.7 billion and General Motors at $2–3 billion excluding Korea, after adjusting for size. Houchois highlighted Ford’s higher exposure to aluminum, which faces a 50% tariff. That offsets the benefit of Ford’s higher U.S. final assembly footprint but also contributes to roughly 25% lower average emissions, reinforced by strong hybrid penetration. As a result, Ford’s strong Corporate Average Fuel Economy performance leaves it less leveraged to any potential loosening of greenhouse gas rules.
Houchois expects Ford to materially reduce losses at its Model e electric-vehicle unit beginning in 2026. He pointed to second-quarter results showing that all incremental revenue over the first quarter came from Europe while divisional losses held steady, suggesting unit economics are improving. He cited lower unit losses in Europe, fewer U.S. EV sales, peaking investments in the company’s Gen2 “skunkworks” program, and more competitive models as drivers for further loss reduction.
Jefferies lifted its 2025 adjusted EBIT estimate for Ford by 2% to $6.9 billion, with strength at Ford Credit offsetting softer results in the Pro commercial-vehicle business. The firm also raised its 2025 free cash flow forecast by 12% to $2.7 billion on a higher internal dividend from Ford Credit, though that remains below the company’s guidance.
For 2026, the brokerage increased its adjusted EBIT estimate by 25%, reflecting a still-modest 5% margin, supported by an improved product mix in Ford Blue (the traditional vehicle business) and a projected 20% reduction in Model e losses to roughly $3 billion. Houchois cautioned that a valuation of about seven times 2026 earnings and elevated warranty liabilities remain overhangs.
Ford is scheduled to outline a new EV strategy in Kentucky later Monday, August 11, with an emphasis on more affordable electric models. The company’s current EV lineup includes the Mustang Mach-E, the F-150 Lightning, and the E-Transit. Ford’s U.S. sales rose 9.3% year over year in July to 189,313 units, led by the strongest gains in hybrids. Following its second-quarter results late last month, CEO Jim Farley said the company continues to improve the efficiency of its Model e operations.
Additional context and commentary:
– Tariffs and materials mix: Ford’s higher aluminum content can raise near-term cost pressure under current tariff rates, but it also helps reduce vehicle weight and emissions. That tradeoff supports Ford’s compliance position and hybrid strategy, partially cushioning regulatory risk.
– EV pacing and affordability: A pivot toward more affordable EVs is aligned with current consumer demand and should improve scale and utilization, key ingredients for lowering per-unit losses in Model e over time.
– Geography matters: With recent revenue gains coming from Europe while losses held steady, Ford’s geographic mix and product cadence are becoming important levers in the company’s EV turnaround.
– Valuation and risks: The cited seven-times 2026 earnings multiple and warranty liabilities underline why some investors may stay cautious; faster-than-expected EV loss reduction or stronger Blue/credit contributions would be the likely path to re-rating.
Summary:
Jefferies raised Ford’s price target to $9 but kept an Underperform rating, citing tariff exposure, EV losses, and valuation concerns. The firm nudged 2025 EBIT and free cash flow estimates higher and sees 2026 margins improving with smaller EV losses and a stronger Blue product mix. Near term, Ford plans to unveil a more affordable EV strategy, while July U.S. sales rose 9.3% with hybrids leading gains. The outlook is mixed but improving, with hybrids, CAFE strength, and a push to lower-cost EVs offering a constructive path to narrowing losses.