Citi analyst Itay Michaeli has cut his price target and estimates on Ford (F) following the auto giant’s disastrous $8.7 billion Q2 loss, citing “softer North American production, continued adverse mix shifts, commodity costs and greater pressure on Ford Credit.” Michaeli also thinks that Ford’s turnaround plan will be insufficient:
While Ford unveiled a robust domestic product plan, we remain sceptical that Ford can reduce fixed costs and enhance car profit margins fast enough to offset lost truck profits and higher commodity costs, absent a clear U.S. macro recovery.
Michaeli didn’t go so far as to downgrade his rating to Sell, however, citing Ford’s capital postion as well as the presence of Kirk Kerkorkian’s Tracinda Corporation in the boardroom:
Despite our negative fundamental view, we remain reluctant to return to a Sell rating given Ford’s adequate liquidity position and Tracinda’s presence and history as a credible active investor. Rather, we continue to favour short-dated Ford Credit notes in the capital structure.
Michaeli reiterates his Neutral rating and lowers his target from $6.00 to $5.50.
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