Ford Motor (F) shares fell lower in pre-market trading after analysts at UBS cut their rating and price target on the carmaker, citing a strong demand blow linked to the looming US recession.
UBS analyst Patrick Hummel cut his rating on the stock to “sell” from “neutral” and took $3 off his price target to a new level of $10 a share ahead of third-quarter earnings of the group at the end of this month, citing the risk of recession in the United States and the impact of a decline in its European operations.
Ford said last week that September sales were solid, rising 16% from a year earlier to 464,674 units, but warned late last month that strained supply chains would cut into its results in third quarter amid what it called “limits on the availability of certain parts as well as higher payments to suppliers to account for the effects of inflation.”
Those limits are likely to increase inflation-related costs for suppliers by about $1 billion, Ford said, adding that up to 45,000 vehicles are missing certain components, ultimately delaying their sale until the last three months of the year, will remain in the market. car manufacturer inventory.
That will impact both third-quarter revenue and its adjusted earnings, which it sees in the range of $1.4 billion to $1.7 billion. Ford will release its third-quarter results on October 26.
Hummel also cut his rating on General Motors GM to “sell” from “neutral,” citing the risk that profits could “more than halve” next year amid rapidly accelerating demand destruction . His new price target on GM was set at $38 per share, down $18 from his previous estimate.
“Despite a 40% negative stock performance for the year, the rapidly deteriorating top-down picture makes it unlikely that GM’s strong EV story can lift the stock with a view of 6- 12 months,” Hummel said.
Ford shares were marked 3.85% lower in premarket trading to indicate an opening bell price of $11.73 each, a move that would extend the stock’s 2022 decline around of 43.5%.
General Motors shares, meanwhile, fell 3.24% to $32.53 each, bringing its year-to-date decline to around 44.5%.
