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Ford Motor Company (F-0. 64%) appears to be slowing down its efforts to produce more all-electric cars (EVs), and one analyst believes this strategy makes sense. This week, Barclays analyst Dan Levy raised his value target for the automaker. while proceeding to say that Ford shares will be bought.
Levy raised his price target on Ford stock from $1 to $16, but that would still constitute a 27% gain over the next 12 months from Friday’s final value. The positive sentiment comes a week after Ford reported that its U. S. EV sales in the first quarter were up 86% year-over-year.
The analyst believes that Ford shares may rise despite those EV sales, not because of them.
Ford said it sold just over 20,000 electric cars in the first quarter nationally, so the strong percentage that’s building up reflects a jump from a weak base. But this still goes against the industry trend. Overall sales of electric vehicles in the U. S. U. S. revenues grew 8% year-over-year in the first quarter of 2024, well below the 40% year-over-year expansion seen in the fourth quarter.
Ford is also trying to increase sales of electric cars already produced. This week, the company announced it would cut costs for its all-electric F-150 Lightning pickup truck by as much as $5,500. This comes after the company slowed production of the vehicle to compensate for emerging inventories.
Ford’s merit over its competition is that it can be flexible beyond its EV offering. This includes a diversity in development of hybrid electric cars, as well as its Transit advertising vans. Its overall first-quarter sales for hybrids and Transit vans set new records.
While the demand for electric cars has slowed, this strategy turns out to be working. This is also why the automaker’s stock looks like a smart buy at recent levels. With earnings and loose money expected to grow more this year, this analyst is a smart thing to do.
Howard Smith does not hold any positions in any of the above. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
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