Morgan Stanley upgrades Ford to Overweight

Yahoo Finance Live examines Ford shares amid its stock upgrade to Overweight by Morgan Stanley.

Video transcript

SEANA SMITH: Well, speaking of Morgan Stanley, upgrade today. My pick today is Ford. Morgan Stanley's Adam Jonas upgrading the stock to overweight, but keeping his price target, saying its valuation is attractive. Jonas is also bullish on Ford's restructuring efforts and thinks the auto giant could get a boost from the Inflation Reduction Act, writing in a note to clients that it has, quote, "the potential to improve the return on investment for Ford's US onshore EV."

Morgan Stanley weighed in on its rival, GM, too, keeping its rating, but lowering its price target to $30 a share, warning that the company could lower its profit guidance, in part due to some of those cost pressures.

Dave, it's anyone's guess right now in terms of how strong the automakers are going to be over the coming quarters. Yes, on some metrics, it does seem like the supply chain is improving. Yes, prices, at least, do remain high, which are, of course, better for their margins. But there are still clear areas of weakness and I think a reason why a lot of these analysts are lowering their price target on these names.

DAVE BRIGGS: Well, Ford, within the hour, just said they're going to have to adjust their 2023 Ford F-150 Lightning prices based on the supply chain. But fortunately for them, that has a lot of pricing power. Everybody wants that car. It sells on an average of eight days on a lot. And it's gone. And their other one, the Maverick-- that's the compact pickup-- they sold 86,000 reservations in one week last month.

So GM struggled a little bit today, as you can see, down just about 3%. They're going to be fine in the long run of the EV game, but Ford is out of the gate so strong with the wide variety, in particular with the SUV and pickup space, so safe bet there.