Analysts: Ford Shares Poised to Take a Ride
DETROIT (AP) _ Wall Street analysts predict Ford Motor Co.’s stock price is going to shoot higher because the automaker is doing well on two fronts: cushioning itself against Europe’s stagnant economies and taking market share from competitors at home.
They’re also bullish on Chrysler Corp., but struggling General Motors Corp. continues to get a neutral rating from industry watchers.
Ford stock passed $50 a share last week when Salomon Brothers analyst Jack Kirnan raised his estimates for this year’s earnings from $2.10 a share to $3.25.
The automaker’s price lead over rivals GM, and Chrysler is nearly $13 a share. On Monday, Ford was up again, gaining 75 cents to $52.50 on the New York Stock Exchange.
″As far as Ford’s concerned, in terms of what they control themselves, they’ve been doing an excellent job,″ said Nick Lobaccaro, an S.G. Warburg & Co. auto analyst. ″The only thing holding them down is the car market. Once that straightens out, we see them in the $60s.″
A consensus of 20 analyst estimates for annual earnings this year puts Chrysler as the projected top earner this year: $4.37 a share or $1.52 billion. Ford follows at $2.65 a share or $1.29 billion, with GM at $1.33 a share or $918 million.
Analysts see room for Chrysler’s stock price to improve despite a huge run last year that more than tripled the automaker’s shares from around $11 to nearly $40. They were trading Monday at $39, down $1 on the NYSE.
Chrysler’s steady stream of new cars and trucks, a growing reputation for manufacturing efficiency and quality and its limited exposure in Europe are keeping investors interested despite so much recent growth.
″My feeling is the majority of people are underestimating how fast the company continues to improve,″ said Ted Shasta, an institutional investor with Loomis, Sayles & Co. in Boston. ″The pace of change there continues to go at a very rapid rate.″
GM, though hailed for its structural improvements and management changes, is getting only neutral opinions because analysts think the company’s stock price already reflects its restructuring. Analysts and investors worry that GM’s aging model lineup will continue to make market share loss inevitable.
GM’s goal of maintaining its 34.7 percent share of the U.S. car and truck market is difficult at best to achieve, analysts say. Overall industry improvement could limit the damage, but a stagnant or only slightly improving market - the pattern so far this year - favors Ford and Chrysler’s newer products.
GM was unchanged Monday at $39.75.
″I think GM is a difficult stock to deal with right now,″ Shasta said. ″It could be a very good stock, and I really think the worst is behind them. But they need a market recovery more than the other two.″
Shasta said he’s encouraged about Ford because it has installed Jacques Nasser, a crisis-tested manager, as its top executive in Europe. Ford also has slashed expenses there, including 10 percent of its payroll.
Nasser recently predicted Ford of Europe would break even this year, a dramatic turnaround from two years of huge losses.
The arrival of the critically acclaimed Mondeo midside car as a replacement for the Sierra and better control of other model inventories has helped Ford of Europe lower the amount of its incentives to buyers, which Kirnan said reached about 15 percent of sales in the second half of 1992.
In North America, where Ford was the only automaker to gain both car and truck market share in 1992, its pace has continued through the first 2 months of this year.
″There’s probably never been a better time to take customers from General Motors,″ Shasta said. ″It’s probably a two- or three-year opportunity.″