Investment bank Jefferies upgrades Ford and General Motors ratings, optimistic about profit prospects
U.S. investment bank Jefferies released a research report on Monday that will At the same time, its rating was raised from "hold" to "buy" on the grounds that the U.S. auto market environment has improved, capital allocation has been optimized, and traditional cost pressures have eased. It is expected that the profits and cash flow of the two companies will strengthen in the next two years. Jefferies raised its price target on Ford to $17.50 from $14.50, arguing that upcoming second-quarter results could mark the bottom of the company's margins. Analyst Philip Hojoy said the second quarter is expected to be the low point for Ford sales as the F-150 production line, which had been affected by a fire at an aluminum supplier factory, resumes normal production. Given the healthy demand in the U.S. market, management may raise its full-year guidance in its second-quarter report. Jefferies raised Ford's forecast for adjusted EBIT in 2026 to $10.3 billion, near the upper end of the company's guidance range. For General Motors, Jefferies raised its price target to $99 from $90, implying room for nearly 20% upside from Friday's closing price. The increase was mainly based on the confidence brought by General Motors' second-quarter financial report. The company achieved revenue and profit exceeding expectations and raised its 2026 performance guidance. Hojoy pointed out that GM has made "meaningful progress" on recall warranty costs, and that costs are expected to be further released in the future. Jefferies expects GM to generate more than $10 billion in annual free cash flow by 2027, driven by new truck launches, efficiency improvements and growth in digital services revenue, with earnings per share expected to approach $16. Although both companies face macro uncertainties such as tariffs, Jefferies believes their risk-reward ratio is attractive. Ford will report earnings after the bell on Tuesday, and the market will pay close attention to management's outlook for the second half of the year and 2027.