15-05-2025
‘Run for the Hills,' Says Philippe Houchois About Ford Stock
Ford (NYSE:F) has become the first American automaker to increase car prices in response to the tariffs introduced by Trump. At present, the price hike affects only three models, all manufactured in Mexico, which are now subject to a 25% import tariff when brought into the U.S.
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However, while not dismissive of the issue, Jefferies' Philippe Houchois, who's ranked in the top 4% of stock pros on TipRanks, thinks tariffs aren't Ford's main challenge right now.
That's because, in his view, much of the potential damage is already being offset. A revision to Proclamation 10908 – the same measure that introduced those tariffs – has since reduced duties on parts and offered credits for domestic assembly, effectively cushioning the blow for U.S. automakers. As a result, Houchois sees a revenue offset of at least $2 billion and has raised his Group EBIT forecast by 42% to $6.8 billion, just below the low end of Ford's original guidance range of $7 to $8.5 billion.
That, though, is as positive as Houchois gets, as the analyst thinks Ford continues to face 'multiple overhangs.'
Houchois points out that Ford's financial baggage hasn't disappeared. Since early 2020, the company has over-provisioned warranty costs by more than $10 billion, an overhang that will eventually hit cash flow as settlements catch up. Meanwhile, Ford's balance sheet is hanging in there, but just barely. With only $6 billion in net liquidity in Q1 (or $5.2 billion after adjusting for negative working capital), the company's dividend coverage looks shaky at best.
Meanwhile, in Europe, the company holds a limited market share in personal vehicles of just 3.3% and relies heavily on Volkswagen for its electric vehicle lineup, raising concerns around CO₂ compliance and long-term competitiveness. Yet, Europe still contributes significantly to Pro earnings (around 25%), which makes its position 'challenged with significant risk of restructuring.'
Furthermore, on the EV and software front, despite some one-off improvements in Q1, Ford has yet to show meaningful scale or a clear path forward, especially after scrapping its FNV4 platform.
Those issues aside, Ford is also at a disadvantage footprint-wise when compared to rival GM. Even though more final assembly happens in the U.S., Ford is less reliant on U.S. sourcing (about 47% vs 61% for GM). And While Proclamation 10908 provides a benefit, giving Ford an estimated $2.5 billion in offsets in 2025 (vs. GM's $2.1 billion), the overall impact for Ford will remain larger ($1.2 billion, while GM's will be around $1 billion) due to its lower U.S. sourcing and the higher expected tariff impact in 2026 compared to GM.
No surprise, then, that Houchois isn't sticking around. Despite nudging his price target up from $7 to $8, he's keeping a firm Underperform (i.e., Sell) rating on Ford stock. With a potential 23% downside from current levels, Houchois's message to investors is loud and clear: run for the hills. (To watch Houchois' track record, click here)
One other analyst joins Houchois in the bear camp and with an additional 11 Holds and 2 Buys, the consensus view is that Ford stock is a Hold (i.e., Neutral). Going by the $9.82 average price target, a year from now, shares will be changing hands for a ~7% discount. (See Ford stock forecast)
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