Just days after Morgan Stanley cautioned
on lower short-term profitability for Ford, Goldman Sachs has downgraded Ford
from a ‘Buy’ rating to a ‘Neutral’ rating and slashed its target price on the
stock from $21 to $17 despite a near 22 per cent drop in the stock price in the last
three months.
Goldman Sachs hinted at Ford’s cheap
valuation but noted that the stock could be ‘dead money’ in the short term.
Analysts at the investment firm believe that lower operating profits, higher
capital expenditure compared with earlier forecasts and $1.5 billion worth of
annual pension contribution to employees over the next two years, will likely
drain the company’s cash flows leading to lower payouts to shareholders.
Analysts at Goldman also pointed at the
likelihood of negative earnings per share (EPS) growth for Ford to persist up
till the second quarter of 2015 as production for the new aluminium-bodied
F-150 truck has kicked off slower than expectations. Production capacity for
the new F-150 is now expected to gain full steam by the second half of next
year.
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