This Ford stock forecast article was written by Maria Grishaev, Analyst at I Know First.

Executive Summary

• Ford Motor Company has a good year so far in 2021. The stock price went up by 68.66% YTD.
• With a new electric car that is giving Tesla tough competition and its plans to invest $30B in the electric vehicle segment, Ford is preparing for the future.
• Quantitative analysis results indicate bullish signals after stock price topped out the moving average line.
• F deserves a one-year target price of $21, representing potential revenue growth.

Overview

The Ford Motor Company, commonly known as Ford, is an American multinational automaker. The company designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide.

Last month Ford unveiled the newest member of its growing work-ready lineup – the all-new, all-electric 2022 F150 Lightning® Pro. The all-new F-150 Lightning Pro makes no compromise in terms of innovation, power, or capability. At an affordable price, the new car makes it easy to go electric with amazing new capabilities plus easy commercial charging solutions. Ford Motor Company also announced plans to ramp up investment in the Electrical Vehicle segment to a massive $30 billion by 2025.

Ford also announced its plans to redefine success for commercial customers with Ford Pro – a global vehicle services and distribution business that will increase uptime and reduce ownership costs, leading to higher productivity and performance. The new business – separate within Ford and the first of its kind among automakers – is a major outcome of the Ford+ plan for growth and value creation, which is based on building enduring, always-on customer relationships.

In addition, back in March, Ford announced that its intention to offer a $2.0 billion aggregate principal amount of convertible senior notes due 2026 in a private placement to qualified institutional buyers. Ford also expects to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $300.0 million aggregate principal amount of the notes, solely to cover over-allotments, if any. While the five-year notes will pay no interest, they can be converted into Ford commons shares at a rate of 57.1886 per each $1,000 in principle, equivalent to a price of around $17.49 each.

The F stock went up by 2% after the company announced that her electrified vehicle sales grew 184 percent in May, achieving a new electrified vehicle sales record with sales of 10,364 vehicles. The stock price surged in total by 68.66% YTD in comparison to an 11.87% rise of the S&P500.

The Electric Vehicle industry has several companies that have a market cap above $1B. Ford is one of them. The Ford stock performed better than its competitors in this sector. Most of the competitors’ stocks went down. Some went down by 1-2% and others went down by up to 56%

Multiples Valuation Analysis Results in Higher Target Price

I estimated my own target stock price by using the Multiples Valuation model. I looked for Ford’s peer companies’ P/B ratios and calculated its average – 3.49, while F’s current P/B ratio is 1.8. This shows us a potential for growth in the company’s performance.

Next, I made a few assumptions about the future of the company based on what I wrote above. I assumed that the total assets will go up by 2%, while the liabilities will go down by 5% in the next year. These are reasonable numbers, given the company’s $2B convertible notes offering that will affect the total liabilities and the assets at the same time. I also assumed that the number of shares also will go up by 10%. That in total brings us to a future book value per share of 6.16.

In total, I received a target price of $21, which is 41% higher than the company’s current stock price.

Indicators Show a Strong BUY Signal

As we can see in the chart, the most recent time that the stock price crossed above the moving average for 200 days (the purple line) was in October 2020 and it signaled a potential change in trend. That was indeed the case as the stock rose from there. We can also see that the moving average for 50 days (the red line) crosses above the moving average for 200 days also in late September and it also indicates that the trend is shifting up. This is the known “golden cross” that gives us a buy signal.

The Bollinger Bands® squeeze also indicated a potential opportunity. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. This can be seen happening here from December 2020 to January 2021. The peak outside the bands in May and January corresponds with announcements of number of sales in various continents.

The Yahoo Finance coverage for the company is performed by 24 analysts, with the majority of whom took the hold position on the stock.

Based on the fact that the vaccine has proven the formula has proven to be quite effective against coronavirus and is effective against the mutant variants, the weaknesses and dangers have a smaller effect on the stock price. So, it’s my estimation that the stock price will continue to rise and place my target price at $13, making it a 44% premium over the current market price.

Conclusion

I take the buy-side on F stock because it has a solid market position in recent years. It is reasonable to expect further growth of F stock price as the automotive maker continues to expand in the electric vehicles segment.

Please note that the stock-picking AI of I Know First has a high signal on the one-year market trend forecast. Also, the light green in the short time horizons is a mildly bullish signal while the dark green in the 3-months and one-year time horizons is strongly bullish.

Past Success with Ford Stock Forecast

I Know First noticed the upward trend of F and have been bullish with the price since April until now. On April 29th, 2021, the I Know First algorithm recommended F as one of the top stock picks. The AI-driven Ford stock forecast was successful on a 1-month horizon resulting in a 29.04% gain since the forecast date.

Moreover, on May 14th, 2021, the I Know First algorithm also recommended F as one of the trades in the Robinhood Trades Forecast package. The AI-driven Ford stock forecast was successful on a 14-days horizon resulting in a 25.8% gain since the forecast date.

To subscribe today click here.

Please note-for trading decisions use the most recent forecast.