Goldman Sachs analysts say investors could see a 40% return on Ford (NYSE: F) stock as the automaker restructures its business and boosts its bottom line.
Goldman upgraded the company to buy from neutral and raised its 12-month price target to $12 from $9, sending shares up 52 cents, or 5.8%, in early trading Monday, to $9.50. The move implies a 33.6% upgrade from Friday's close. Combined with a 6.7% dividend yield, which Goldman called "sustainable," that puts the expected gain just over 40%.
"While we still expect a downward earnings trajectory into 2019 (North America profit under-pressure), we believe next year will represent trough earnings and the combination of a refreshed product cadence globally as well as cost improvements from strategic initiatives will begin to take hold," analyst David Tamberrino said in a note.
Ford's announcement of $7 billion in restructuring of its cash spending over the next five years will help "improve its plant footprint and cost structure," Tamberrino added.
Ford shares are off 28% year to date. The company reported a $991-million profit for the most recent reporting period.
In other developments involving the car maker, Ford selected Dana Incorporated (NYSE: DAN) to supply Spicer® SmartConnect™ disconnecting all-wheel-drive (AWD) systems for the global Ford Edge Program.
Starting with the 2019 model year, the company will be the exclusive worldwide supplier of rear drive units for all versions of the Ford Edge in North America, Europe, and Asia-Pacific.
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