Ford shares rallied before the opening bell Friday morning after Bank of America Merrill Lynch upgraded the equity to buy from neutral.
The brokerage highlighted Ford's favorable profit outlook, the result of what's expected to be a strong utility vehicle and truck lineup over the next few years and a major restructuring and future business strategy.
The upgrade comes as "Ford's 'tough' days [are] starting to fade into the rearview," wrote Bank of America autos analyst John Murphy. The company should "hit Escape velocity in 2H:19+ with solid Car Wars position ... upgrade to Buy."
"Ford is just starting to hit a more sustainable inflection in earnings (even more so in 2020), driven by the combination of a favorable product cadence in the all-important US/[North America] market and restructuring efforts," the analyst wrote.
Murphy bumped his price target on Ford to $14 from $13, implying about 37% upside from Thursday's close. He also increased his 2020 and 2021 earnings per share estimates for the automaker to $1.30 and 90 cents, respectively.
"Our annual Car Wars analysis indicates that Ford will have one of the freshest line-ups in the US market over the next four years," Murphy added. "Combined with the company's strategy to exit the passenger car segment, this product cadence bodes well for market share, mix/price, and profits in Ford's North America business."
The shares jumped 2.6% in premarket trading.
This is a developing story. Check back for updates.
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