Shares of Ford Motor Co. fell Wednesday after a Morgan Stanley analyst cut his stock price target by $2 and reduced earnings estimates through 2016.
It was the second day in a row that analyst Adam Jonas cut the target price of an automaker. On Tuesday, he knocked $2 off General Motors Co.'s target price, and that helped send GM stock down almost 6 percent for the day. The decline continued at a much slower pace Wednesday.
With Ford, Jonas cut his target price from $16 to $14 in a note to investors Wednesday, saying that it will be difficult for the company to begin production of its new aluminum-body F-150 pickup truck.
"We believe it's a great product that may be far less profitable than the market anticipates," Jonas wrote.
There are unique considerations for temperature and humidity in the factory to handle aluminum to prevent corrosion, he wrote. Stamping out body panels requires special changes to machinery and welding processes, and the paint shop has to deal with different coatings so paint sticks to aluminum, Jonas wrote.
"As we understand it, virtually everything that makes physical contact with the vehicle in the production process has been replaced, retrained or substantially augmented," Jonas wrote.
Some of Ford's recent and less complex model launches have had initial quality problems, Jonas wrote, and Ford will face price pressure from its main competitors, GM's Chevy Silverado and GMC Sierra, and Chrysler's Ram.
Ford, Jonas wrote, has "bet the ranch" on higher fuel prices, but he wonders if people will pay more for an efficient aluminum truck if gas holds at $3 per gallon. The aluminum strategy, he wrote, was developed four or five years ago at a time of more volatile fuel prices. Jonas estimated that the new F-150 accounts for over 90 percent of the company's global automotive profits.
Jonas cut his estimate of Ford earnings to 97 cents from $1.30 per share. Next year's estimate was cut from $1.75 to $1.40, and Jonas cut his 2016 estimate from $1.88 to $1.52.
Ford shares fell about 2 percent to $13.62 in the morning but then recovered some lost ground. They were down 10 cents to $14 by early afternoon. The morning low was the lowest intraday price since May 2, 2013.
Ford wouldn't comment directly on Jonas' assertions, but said in a statement that everyone at the company is "totally focused on continuing to make progress on our One Ford plan to deliver profitable growth for all of Ford's stakeholders."
GM shares fell as low as $30.79 Wednesday morning, the lowest level since May 1, 2013, and far below the $33 initial public offering price from November of 2010. By early afternoon, GM shares were down 17 cents at $31.60.