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According to analysts at Jefferies, which recently downgraded the company’s shares, it’s too early for investors to rate and trade legacy automakers like Ford given the limited upside.
The downgrade comes a day after shares fell 8%.
Important facts
Shares of Ford fell 0.5% on Thursday to nearly $22 a share, despite a downgrade from analysts at Jefferies, who warned the stock may be outdated.
Analyst Phillipe Houchois downgraded Ford from a “buy” to a “hold” rating, noting that shares are only recovering after a hot streak that sent the stock skyrocketing more than 130% in 2021 still have limited upside potential.
Though the company is making solid progress on its electric vehicle ambitions, it’s still too early for investors to trade Ford stock like an electric vehicle company, he argues.
The Jefferies analyst then hesitates to give Ford stock a higher valuation multiple, noting that the company is still vulnerable to manufacturing issues caused by the pandemic and semiconductor shortages.
Ford shares have repeatedly beaten most analysts’ estimates, causing them to either downgrade the stock or adjust price targets: Despite the downgrade, Houchois increased its price target to $25 per share from $20 per share.
After the massive rally, shares are still “in good shape and in good hands,” according to Houchois, who likes the direction the company is taking under CEO Jim Farley.