Wall Street Analyst Predicts Rough Times Ahead for Ford
After years of record profits thanks to trucks and SUVs, is Ford headed in the wrong direction?
In the wake of Ford’s recent firing of CEO Mark Fields, leading Wall Street analyst Adam Jonas has predicted rough times ahead for Ford. Despite a string of massive quarters and record earnings for last year or two, the Morgan Stanley analyst suggests that Ford’s earnings outlook may need a readjustment of up to 50 percent. That’s a negative 50 percent, not a positive.
Two major factors drive his findings: stagnation in the growing sector of autonomous cars, and an aging model lineup. With many cars due for replacement soon, Ford could be expected to lose market share to its rivals, both domestic and imported.
Furthermore, not having a real competitor to the Chevrolet Bolt is leaving money on the table, as consumers eagerly snap up the sub-$30k electric car. Jonas posits that by replacing Fields with Jim Hackett, the board is acknowledging the potential for rough times ahead.
While Mark Fields played it safe, resulting in solid profits and growth in the post-recession era, the industry is changing rapidly. Many, like Jonas, predict that Ford is ill-equipped to handle those market changes unless they act quickly.
Replacing Fields as CEO is a sign the board intends to do just that, with sweeping changes in upper management expected in the coming months. This will hopefully result in less of a turnaround and more of a correction of trajectory, allowing Ford to remain profitable and move forward.
The Blue Oval is looking to enter a new era of fast development and quick decision-making, a strategy that helped General Motors rebound and helps small startups like Tesla gain ground quickly. It’s expected that this will help Ford adapt to a rapidly changing marketplace instead of playing catch-up, which they are on the verge of doing.
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Story via: [The Detroit News]