Ford Motor shares fell more than 7% midday Friday, pulling back after a two-day rally that saw the stock surge nearly 21% following the launch of its Ford Energy battery storage subsidiary and positive analyst commentary.
Barclays analyst Dan Levy said late Thursday that the upmove, largely driven by artificial intelligence and data center interest, appeared "overdone." Still, Levy praised Ford's warranty costs improvement and said that the company's 2026 earnings guidance appeared conservative.
Levy highlighted a $400 million year-over-year warranty cost improvement in the first quarter, marking Ford's first reduction to pre-existing warranty reserves since the fourth quarter of 2021. He said there is opportunity for additional cuts ahead.
On earnings, Levy said Ford's 2026 guidance looks conservative, with his EBIT estimate of approximately $10.5 billion sitting at the top end of the company's range and above the consensus estimate of $9.2 billion. He added that Ford has levers to offset potential cost pressures in 2027.
Regarding the sharp two-day gain, Levy noted the move was likely driven by sudden interest in Ford's battery storage efforts and a possible short squeeze. He said some clients justified the rally by estimating $1 billion in EBIT benefit from the energy unit, translating to roughly 20 cents in earnings per share, or about $2 per share at a 10x multiple.
Levy maintained an Equalweight rating and $13 price target on Ford shares.
The initial rally began Wednesday after Morgan Stanley analyst Andrew S. Percoco said Ford Energy represents a significant profit opportunity that could help offset losses in the electric vehicle division. Percoco said Ford's licensing agreement with CATL positions it as one of the few semi-vertically integrated domestic energy storage system suppliers in the United States.
source https://www.investing.com/news/stock-market-news/ford-shares-sell-off-after-twoday-rally-as-barclays-says-ai-trade-overdone-4693295
