Ford Stock Is Moving Up. Monthly Sales, and 2 More Things, Are Helping. -- Barrons.com

Al Root

Ford stock is having a good day, for a few reasons.

Shares were up 1.6% in late trading Thursday while the S&P 500 and Nasdaq Composite gained 0.8% and 1.3%, respectively. The market is helping, but monthly sales and Wall Street get some of the credit.

Thursday, Citi analyst Itay Michaeli raised his Ford price target to $18 from $16 after spending time with the company. "Management conveyed a confident tone," wrote Michaeli. The company views Ford Pro's results, a bright spot in the company's latest financial results, as sustainable.

Ford Pro, Ford's commercial business, generated $3 billion in first-quarter operating profit. Its profit margin was 16%, up more than 6 percentage points year over year. That was better than Wall Street expected.

"Given recently improved [EV sales] trends -- post price cuts -- management didn't rule out a path for achieving a positive contribution margin on current-gen EVs, assuming pricing can bottom," said Michaeli. The EV business lost $1.3 billion in the first quarter.

A positive contribution margin doesn't mean profits are coming. It essentially refers to losing less money on each additional sale.

There is some evidence of improving sales trends. Ford announced its U.S. April sales volume on Thursday. It delivered 8,019 all-electric vehicles, up almost 130% year over year. In 2024, Ford has delivered 28,242 EVs in America, up about 100%.

Ford also delivered 17,997 hybrid vehicles in the month, up about 60%. Ford has sold some 56,000 hybrids in 2024, up about 50% from a year earlier.

Strong EV and hybrid sales are another reason the stock is higher in Thursday trading.

On the flip side, Ford is recalling 242,669 Maverick trucks. There is a chance their taillights won't illuminate.

Recalls aren't a positive but don't typically impact automotive stock prices. Millions of vehicles get recalled in the U.S. each year. It's part of the process used by the government to keep vehicles on roads as safe as possible.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 02, 2024 15:40 ET (19:40 GMT)

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