Citi Cuts Price Targets for Ford and GM, Sees Risk to Ford’s EBIT Guidance

Citi analyst Itay Michaeli updated his estimates for General Motors (NYSE:GM) and Ford (F). The analyst expects Ford to miss and GM to top the consensus analyst estimates for Q1E EPS, although he adds that its still too early to call the Q1 setup.

Michaeli believes both Ford and GM will be able to maintain their 2022 EBIT guidance, based on the recent pricing data points. However, the analyst sees a greater risk at Ford due to the carmakers high dependence on stronger Q2-Q4 production and Europe exposure.

Even though the NT space remains fluid, Citi believes that certain mid-term implications could benefit pickup trucks and reinforce the earnings power for LT, as well as boost its SoP potential.

Michaeli maintained GM as the top pick, slightly lowering the price target from $100 to $95. The analyst also maintained its Neutral rating on Ford, slashing the target to $18 from $23.

The slashed PT for Ford reflects the estimate changes and lower target multiples that reflect risk tied to a more back-half loaded 2022 outlook plus incremental risk in Europe.

“While we do see relatively more NT risk at Ford given these factors, we are becoming more constructive on the longer-term story particularly after the companys updates from early March. To that, we still see LT upside potential above $30 on SoP,” Michaeli said in a client note.