Morgan Stanley downgraded Ford on Friday, saying its earnings and cash flow are under pressure and its dividend is at risk.
The number two U.S. automaker is suffering from a perception among investors that the automaker lacks transparency and is failing to take quick, decisive action in executing its turnaround plan, Morgan Stanley analyst Adam Jonas said in a note Friday.
Jonas downgraded Ford from "overweight," the equivalent of a buy rating, to "equal-weight," which is equivalent to a hold. He lowered his 12- to 18-month price target from $14.00 to $10.00.
Shares of Ford were down slightly in premarket trading on Friday morning, at around $8.48 a share.
Ford's recently announced $11 billion restructuring plan is a "crucial step" for the company, whose share price has fallen more than 30 percent since the beginning of the year. But the company has not provided enough detail on how the $11 billion will be spent.
"We believe investors will pay for details and execution, which we don't see evidence of currently," Jonas said.
The company also cancelled its investor day in September, which worries Jonas.
There are not enough details on the automaker's plan to invest in autonomous driving and other future technology either. It appears to be behind competitors, such as larger rival General Motors, which has attracted outside investments in its Cruise Automation unit.
Japanese conglomerate SoftBank and automaker Honda have both made recent investments in GM Cruise, which is developing autonomous driving technology for the automaker. Morgan Stanley values GM Cruise at $11.5 billion, more than ten times what it values Argo AI, an autonomous driving research company Ford has taken a significant stake in.
Despite all this, Jonas thinks CEO Jim Hackett is a visionary leader, who thinks unconventionally and taking a long-term approach to managing the business.
"There are solutions, and management has a window of opportunity to execute," Jonas said. "While we do believe investors will eventually pay for details and execution, we think the market needs more evidence of success before embracing the Ford restructuring story."
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