BofA Securities analyst John Murphy has maintained a Buy rating on Ford Motor Co (F) with a price target of $20. This optimistic outlook stems from recent changes to Ford’s product plans, which Murphy believes will enhance profitability and capital efficiency.
In a recent announcement, Ford outlined plans for a new electric commercial van launching in 2026 and two new electric pickup trucks in 2027. These new vehicles, alongside the continued leverage of hybrid technology in three-row SUVs, will see Ford focus on its core strengths: commercial vans, mid- and large-sized pickup trucks, and long-range SUVs.
Murphy highlighted the company’s investments in lowering the cost of its EV platforms, a critical factor in achieving profitability for its next-generation electric trucks. Ford’s dedicated Skunkworks team is spearheading these cost reduction efforts.
While the company will incur a $400 million non-cash charge for the write-down of manufacturing assets associated with its previously planned electric three-row SUV, Murphy emphasized that this decision will ultimately lead to more focused and efficient operations. Additionally, Ford will invest $1.5 billion in further expenses and cash expenditures over time.
Looking ahead, Ford has announced a reduction in its annual capital expenditures related to pure EVs from 40% to 30%. This strategic adjustment, combined with the company’s focus on product cadence and incremental profit opportunities, positions Ford for structural earnings growth.
Murphy added that these changes will bolster Ford’s Core business, strengthening its earnings, cash flow, and balance sheet, which will further enable future investments.
As of Thursday’s market close, Ford shares were trading at $10.98, up 1.15%.
