Wall Street has high expectations for Ford’s investor day

Wall Street has high expectations for Ford Motor’s first investor day under CEO Jim Farley on Wednesday.

The company’s stock price has roughly doubled since Farley took control of the company Oct. 1. That includes a 12.6% increase last week after the debut of the company’s new electric F-150 Lightning pickup truck.

Investors will be watching the highly anticipated investor event to see if Farley can keep up the momentum. He has promised to provide details his management team’s direction for the automaker.

″[It’s] a big deal. It’s my management team’s coming-out party,” Farley said last week. “Yes, we’ve had a couple good quarters. That’s great, but really the big test is what’s our plan for the company and how it’s going to add value.”

Farley’s predecessor, Jim Hackett, was criticized by Wall Street for failing to detail his turnaround plan and having an unclear vision to fix Ford’s operations. Farley’s plan will have to be detailed to appease Wall Street.

“Since Jim Farley has taken over as CEO, Ford has promised increased transparency and measurable [key performance indicators] so we can track Ford’s progress and execution,” RBC Capital Markets analyst Joseph Spak said in a note. “We expect those, along with financial targets, to be detailed at the event.”

Other expectations range from a clear path for the company to achieve an 8% adjusted profit margin to new details regarding its plans for electric and autonomous vehicles. Here are additional details on those items and more.

Financial targets
An ongoing promise of Farley has been providing clear financial targets that Wall Street can measure the company’s progress against.

One of the main targets analysts want to see is a long promised 8% global adjusted profit margin target, including 10% in North America and 6% in Europe. The 8% was promised by Hackett as well as his predecessor, Mark Fields, as part of a “2020 vision” that never happened.

“We’ll look for an update and a bridge to Ford’s prior 8% margin target,” Citi analyst Itay Michaeli said in a note Friday. “The more details the better. Though consensus out-year estimates appear in-line with Ford’s ~8% target, the Investor Day serves an opportunity to build greater confidence.”

Before the coronavirus pandemic, Ford’s adjusted profit margin was 4.1% in 2019, followed by 2.2% in 2020. Due to an imbalance of supply and demand in new vehicles due to an ongoing global semiconductor chip shortage, it was inflated to 13.3% during the first quarter of this year.

For comparison, General Motors’ adjusted profit margin was 6.1% in 2019, 7.9% in 2020 and 13.6% during the first quarter of this year.

Wells Fargo analyst Colin Langan expects Ford to reaffirm its long-term margins at the event, and mostly focus on the “future mobility themes” such as electric and autonomous vehicles and data monetization.

Bronco EV?
Following the successful debuts of the Ford Mustang Mach-E crossover and F-150 Lightning, investors want to know what’s next for Ford’s electric vehicles.

Ford is viewed as trailing Tesla as well as GM when it comes to battery supply, it’s future EV lineup and overall plans.

“Key to Ford’s future stock performance will be convincing investors the automaker can emerge a relevant player in EVs,” said Deutsche Bank analyst Emmanuel Rosner in a note.

Farley has said the company plans to electrify its most iconic nameplates, leading some such as RBC’s Spak to question whether the company will offer an electric version of its upcoming Bronco SUV.

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