One Wall Street Analyst Believes Ford Stock Has 27% Upside

Ford motors (NYSE: F)The company appears to be weakening its efforts to make more all-electric vehicles (EVs), a strategy that one analyst believes makes a lot of sense. This week.Barclays) analyst Dan Levy raised his target price for Ford shares, while continuing to say that Ford stock should be bought.

Levy raised his price target for Ford shares by $1 to $16, but that still implies a 27% increase over Friday's closing price over the next 12 months or so. Levy's positive view comes a week after Ford reported a year-over-year surge in first-quarter U.S. electric-vehicle sales of 86%.

This analyst believes that Ford's stock price will rise despite the increase in EV sales, not because of them.

Electric Vehicle Sales Rise

Ford reported domestic EV sales of just over 20,000 units in the first quarter, so the large increase reflects a jump from a low base. However, this still runs counter to the industry trend, as total U.S. EV sales grew 8% year-over-year in the first quarter of 2024, well below the 40% year-over-year growth rate in the fourth quarter.

Ford is also trying to boost sales of the electric vehicles it already produces. This week, the company announced a price cut of up to $5,500 on its F-150 Lightning all-electric pickup truck. Previously, the company slowed down production of the vehicle to combat an increase in inventory.

Ford's advantage over its competitors is that it is able to launch other products in addition to its electric vehicle products. This includes a growing portfolio of hybrid-electric vehicles as well as all-round commercial vehicles. Its total first-quarter sales of hybrids and all-surface vans both set new records.

With demand for electric vehicles slowing, that strategy seems to be working. That's why the automaker's stock looks like a good buy at recent levels. Analysts are right to expect Ford's earnings and free cash flow to grow further this year.

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A Wall Street Analyst Says Ford Stock Has 27% of Upside was originally published by The Motley Fool.