Ford (F) stock is up 70% since Jim Farley became CEO, but he has work to do | Daily News Byte

DETROIT – As the incoming CEO of Ford MotorJim Farley promised more transparency on Wall Street as well as a clear plan for the future.

At the time, Ford was considered behind the industry when it came to all-electric and autonomous vehicles, connectivity and software. Its messaging and plans were unclear on Wall Street, causing shares to tumble.

Two years later, Farley, 60, has largely delivered on his promises through the company’s ongoing Ford+ transformation plan, but there is still work to be done.

He overhauled operations and largely put Wall Street back in the automaker’s corner for the first time since Alan Mulally — credited with saving the automaker from bankruptcy in 2009 — stepped down as CEO eight years ago. Ford stock is up about 70% since Farley took over, despite recent declines.

“What’s important to us and the team is delivering strong business results,” Farley told CNBC in August 2020, when he was announced as the incoming CEO. “As far as talking to Wall Street … one of the most important commitments we make as a team is a clear and specific plan for the company and the transformation of the company.”

Both of Farley’s predecessors – Jim Hackett and Mark Fields – left the automaker amid lackluster stock prices and lack of confidence in the automaker on Wall Street. Under Hackett, a former furniture company CEO SteelcaseFord’s stock price dropped 40%.

But, as Farley usually says, the automaker remains in the early stages of its Ford+ transformation plan and the industry’s transition to electric vehicles — likely representing the stock’s improvement under Farley but also the recent its fall amid a larger market decline. Ford’s stock hit a decade-high price of more than $25 a share to start the year, but it’s down about 56% from its peak in January.

There remain doubts about the outlook for the auto industry as well as Ford’s ability to carry out its plans. The company continues to experience problems with vehicle launches, warranty costs and supply chains – all things that Farley has promised to fix upon becoming CEO.

“The main risks in our view relate to Ford’s ability to profitably pivot to growth areas such as EVs and AVs, the vehicle cycle, market share, and margins (both margin pressure in a downturn and margin expansion in the longer term from specific company initiatives),” Goldman Sachs analyst Mark Delaney said in a note to investors last week.

Most recently, the company surprised Wall Street with a pre-release portion of its third-quarter earnings report, warning investors of $1 billion in unexpected supplier costs. Since then, the company’s shares have fallen more than 23%, including its biggest daily drop in 11 years the day after the announcement.

“I think the biggest thing he’s done is get the market to believe in Ford again. That belief is probably on hold right now until they show they can meet full-year 2022 guidance in light of the Q3 preannouncement that was not received yet. well,” Morningstar analyst David Whiston told CNBC, echoing other analysts.

Whiston describes Farley as a “blunt communicator” who is “not afraid to take some bold courses of action,” such as internally separating Ford’s traditional and electric businesses; increasing investments in electric vehicles to $50 billion by 2025; and reducing cost and headcount.

“He’s also a ‘car guy’ that I like because he has a passion for the product, which helps get cars like the Mach-E out versus a crappy (economy box battery-electric vehicle) that nobody wants,” Whiston said, before adding that he would like to see fewer recalls and improvements in warranty costs. “But I think Ford is in good hands with Farley in charge.”

Ford’s stock is rated overweight with a price target of $16.12 – about $4 more than its current price, according to average analysts’ estimates compiled by FactSet.

Here are the stock’s best and worst days during Farley’s tenure as CEO so far:

• Jan. 4, 2022, +11.7%: Ford announced plans to nearly double the annual production capacity of its electric F-150 pickup to 150,000 vehicles per year at a plant in Michigan.
• December 10, 2021, +9.6%: Farley told the CNBC Investing Club with Jim Cramer that the company has closed reservations for its electric F-150 Lightning after topping 200,000 units.
• October 28, 2021, +8.7%: Ford nearly doubled Wall Street’s profit expectations and slightly beat revenue projections for the third quarter, leading the automaker to raise its annual guidance for the second time in the past year.
• September 20, 2022, -12.3%: Ford released part of its third-quarter earnings report early and warned investors of $1 billion in unexpected supplier costs.
• Feb. 4, 2022, -9.7%: Ford significantly missed Wall Street’s fourth-quarter earnings expectations and narrowly missed revenue.
• April 29, 2021, -9.4%: Ford wowed Wall Street with its first-quarter earnings results, but the company’s lackluster guidance for the year surprised, even confounded, investors and analysts.

– CNBC’s Michael Bloom contributed to this report.