Insiders And Institutions Are Buying Ford In 2022
Executive Chairman of Ford (NYSE: F) William Clay, Jr. surprised the market by disclosing his second purchase of company stock in the last 3 months. The new purchase is worth 267,697 shares or about $4.5 million which combines with the December activity for a total of 680,197 shares. The amount spent is worth about $12 million and not much compared to the total market cap but the purchases are telling nonetheless. It is generally recognized that insiders don’t buy shares unless there is a good reason and the only good reason to buy shares is that you think they’re undervalued and going higher.
And the institutions feel the same way. The institutions have been net buyers for 4 of the last 5 quarters bringing their holdings up to nearly 57.5%. Activity among the institutions netted a total of $1.92 billion worth of shares in Q1 of 2022 alone which is worth about 2.85% of the market cap with the stock trading near $17.75. It is our estimation this activity will continue in Q2 as well. The company is facing a headwind in the form of supply chain challenges and inflation but those headwinds are still expected to abate in the second half of 2022.
As for the analysts, the consensus rating of 20 analysts is a firm Hold and that is relatively unchanged over the past year, 90 and 30-day periods. The consensus price target is close to $19.50 and implies about 10% of upside for the stock but it has fallen a bit in the last 30 days due to those headwinds we mentioned before. The last two commentaries came out in mid to late March and toned down the sentiment down a notch with two price target reductions to $18. This is only a few hundred basis points above the recent price action and may cap gains in the near to short term.
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Ford Charges Ahead With EV Plans
Ford took the EV market by storm not once but twice over the past year by first announcing aggressive plans for its EV lineup and then splitting the EV and ICE businesses apart. In our view, this can only lead to an eventual spinoff of the companies even though execs say that is not part of the plan. With ICE OEMs trading at 7X or 8X their earnings and Tesla trading over 100X their earnings it seems like a good idea to us and one that could unlock billions in shareholder value.
The latest plan is an acceleration of plans with Volkswagen. Ford and Volkswagen are collaborating on a BEV platform that so far has one vehicle slated for production and another on the way. The deal allowed Ford to upgrade the outlook for EV sales in the EU to 1.2 million units over the next 6 years which will be a boost to both revenue and earnings.
Jeffries analyst Phillipe Houchois said this in his note to investors … "US exposure clearly dominates the earnings profile, but we take a more cautious view on Ford’s recovery in Europe. During the conference, we learned that Europe accounts for a bigger contribution than we expected to FordPro globally."
The Technical Outlook: Ford Is Bottoming
Price action in Ford is bottoming but a full reversal may not come until later in the year. The price action is moving up off of a bottom but still faces stiff resistance at the $18 level. This is the bottom of an open window and may cap gains but, if the market can get above it, could also trigger an inflow of money and higher share prices. In that scenario, we see the stock moving up to the $20 to $22 range with a chance of moving higher on good news. If not, shares of Ford will likely move sideways within a range with the recent lows acting as a floor in prices.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Ford Motor (F) | $13.04 | +0.7% | 4.60% | 12.07 | Hold | $13.82 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
