Analysts are optimistic ahead of Ford’s Q2 results amid rising EU sales: time to buy?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 27, 2021
  • Ford shares edged lower 2% Tuesday morning amid fresh concerns about auto chip shortage.
  • However, upbeat analyst reports in the afternoon pushed the stock price higher for an intraday loss of 1.5%.
  • Analysts are optimistic ahead of Ford’s Q2 earnings citing potential EU sales boost. Time to buy?

Ford Motor Co (NYSE:F) shares fell 2% on Tuesday morning before surging later to trim intraday losses. Ford reports its fiscal second-quarter results on Wednesday, and analysts are optimistic of a significant top-line growth amid rising EU sales.

Zacks Equity Research analysts wrote:

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In a bid to make the Europe segment more profitable and push the development of electric vehicles (EVs) in the continent, Ford’s massive restructuring plan for the region is likely to have reaped positive results for the quarter.

The company plans to make all its passenger car sales in the EU EVs by 2030. It also plans to make two-thirds of all commercial vehicles sales, either electric or plug-in hybrids.

Analysts have raised Ford’s EPS estimates for Q2 three times amid rising optimism.

Should you invest in Ford shares in Q3 2021?

Although Ford’s shares are up 62% this year, the stock could still gain significantly in Q3 based on earnings growth expectations. Analysts expect Ford’s EPS to grow by 175% this year before rising nearly 49% next year. The company could also experience an average 5-year annual earnings growth rate of about 55% based on EPS forecast for the period.

From a valuation perspective, Ford trades at an attractive P/E ratio of 14.21 and a highly lucrative forward P/E of 7.67, making the stock a compelling opportunity for value investors. In addition, its PEG ratio of just 0.26 could also attract high-growth investors.

Source – TradingView

Technical overview: Ford stock price forecast for Q3 2021

Technically, Ford shares appear to be trading just above the 100-day moving average in the intraday chart. In addition, the stock also trades centrally within the ascending channel formation and in the 14-day RSI, suggesting a potential continuation of the current trend.

Therefore, investors can target rebound profits at approximately $14.72 or higher at $16.19. The support levels are $12.66 and $11.31 in the short term.

Bottom line: why buy Ford shares now?

Although Ford shares pulled back on Tuesday, the stock could bounce back significantly ahead of earnings on Wednesday after markets close. 

The current trend formation also seems strong to continue for the next few days, at least, meaning there is still time to ride the trend. Therefore, it may be best to buy Ford shares ahead of earnings after Tuesday’s upbeat analyst reports.

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