Wall Street has high expectations for Ford Investor Day –

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Wall Street has high expectations for Ford Investor Day – fr


Ford CEO Jim Farley speaks with reporters outside the company’s global headquarters on May 19 in Dearborn, Michigan, following the launch of the F-150 Lightning electric pickup truck.
Michael Wayland / CNBC
DETROIT – Wall Street has high expectations for Ford Motor’s first investor day under CEO Jim Farley on Wednesday.
The company’s stock price has practically doubled since Farley took over the company on October 1. That includes a 12.6% increase last week after the launch of the company’s new F-150 Lightning electric pickup truck.

Investors will be watching the highly anticipated investor event to see if Farley can maintain the momentum. He promised to provide details on the direction of his management team for the automaker.

« [It’s] A big deal. This is the night out for my management team, “said Farley last week.” Yes, we’ve had a few good quarters. It’s great, but the big test is really what our plan is for the business and how it’s going to add value. ”

Farley’s predecessor, Jim Hackett, has been criticized by Wall Street for failing to detail his turnaround plan and having a blurred vision to fix Ford’s operations. Farley’s plan will have to be detailed to appease Wall Street.
“Since Jim Farley took over as CEO, Ford has promised increased and measurable transparency [key performance indicators] so that we can monitor Ford’s progress and execution, “said Joseph Spak, analyst at RBC Capital Markets.” We expect these, as well as the financial goals, to be detailed at the event. .

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

Financial goals

An ongoing promise from Farley has been to provide clear financial goals against which Wall Street can measure the company’s progress.

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

“We will be looking for an update and a bridge to Ford’s 8% margin target,” Citi analyst Itay Michaeli said in a note Friday. “The more details the better. While out-of-year consensus estimates appear to be in line with Ford’s target of ~ 8%, Investor Day is an opportunity to boost confidence. “

Ford CEO Jim Farley at the company’s new Red Electric Vehicle Center on May 18, 2021, ahead of President Joe Biden’s remarks.

Michael Wayland / CNBC

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

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

Bronco EV?

After the successful debut of the Ford Mustang Mach-E crossover and F-150 Lightning, investors want to know what the next step is for Ford’s electric vehicles.

Ford is considered to be behind Tesla and GM when it comes to battery supply, its future range of electric vehicles and its overall plans.

“The key to Ford’s future stock performance will be convincing investors that the automaker can become a relevant player in electric vehicles,” Deutsche Bank analyst Emmanuel Rosner said in a note.

Farley said the company plans to electrify its most iconic nameplates, which has made some, like RBC’s Spak, question whether the company will offer an electric version of its next Bronco SUV.

Ford launches the 2021 Bronco with over 200 factory-guaranteed aftermarket accessories for added capability and customization.

Source: Ford

“Our strategy is very simple. We’re not going to electrify every vehicle in every segment. We’re going to focus on our strengths, ”Farley said earlier this month at the automaker’s annual meeting of shareholders. “We are going to electrify our most iconic vehicles. “

In February, Ford announced plans to increase its investment in electric vehicles to $ 22 billion through 2025. That included $ 10.5 billion in new investment and $ 7 billion already spent since 2016.

Analysts also want to know an expected sales target from Ford for electric vehicles. GM has announced plans to sell 1 million electric vehicles per year by 2025 as part of a $ 27 billion electric and autonomous vehicle plan through 2025. This includes the launch of 30 new electric vehicles in the world by then.

Ford last week answered questions from analysts about whether the automaker would make its own battery cells by announcing plans for a joint venture with South Korean battery maker SK Innovation.

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As part of its increased investment in electric vehicles, Ford has announced that it will spend $ 7 billion on autonomous vehicles through 2025, up from $ 4 billion from 2018 to 2023. This includes investments in Argo AI, a autonomous vehicle unit jointly owned with Volkswagen.

A detailed update ahead of the planned commercial launch of Argo’s business next year would be seen as positive for Wall Street.

Lidar delivers ultra-high resolution perception, providing the photorealistic imagery needed to identify small objects for safe operation on complex city streets.

VW

“Our impression is that Argo is making significant progress. A detailed update – including with respect to go-to-market strategies – could further underscore Ford’s position to capture future installed base economies, ”said Michaeli of Citi.

Argo is testing its autonomous driving technology in six US cities using Ford vehicles. Earlier this month, the company unveiled its own lidar, which many say is the key technology for bringing autonomous vehicles to market.

Data

Many of Farley’s promises revolved around connectivity and data monetization, including its advanced fleet and business operations.

During the company’s first quarter earnings call last month, Farley said the company “is only scratching the surface of our customers benefiting from our fully connected vehicles.”

Ford F-150 Lightning 2022

Ford

More recently, Ford said it plans to produce 33 million connected vehicles capable of performing major updates remotely or over-the-air by 2028. On Monday, it also detailed its plans to monetize data from the fleet for customers equipped with the F-150 Lightning.

Langan of Wells Fargo said that while Ford has made several announcements in the weeks leading up to the financial markets day, he remains “optimistic that the event will still surprise positively, perhaps on the big data front which has received less. attention of investors. “

– CNBC Michael Bloom contributed to this report.

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