Jefferies upgraded Ford and General Motors to ‘Buy’, lifting its price targets to $17.50 and $99 on improving earnings prospects and stronger free cash flow generation. The upgrade lands ahead of Ford’s second-quarter earnings, a period Jefferies calls a potential margin trough.
Jefferies analysts upgraded Ford Motor Company and General Motors to ‘Buy’, pointing to improving earnings prospects, stronger free cash flow generation and progress on several operational challenges.
Ford upgraded into a possible margin trough
The analysts moved on Ford ahead of second-quarter earnings, calling the period a potential margin trough as production normalizes following disruptions and the company benefits from improved capital allocation. They raised their price target to $17.50, noting that Ford’s valuation gap with GM has narrowed, with shares trading at about $14, up 10% so far this year.
Jefferies expects Ford’s adjusted EBIT to reach $10.3 billion in 2026, near the upper end of the company’s guided range of $8.5 billion to $10.5 billion. The firm also lifted its adjusted free cash flow estimate to about $4 billion, supported by earnings improvements, working capital benefits and lower supplier EV compensation costs.
Beyond the numbers, the analysts highlighted progress across Ford’s universal EV platform strategy, battery energy storage system investment, warranty improvements and efforts to reduce its European asset footprint.
The second-quarter print and the guidance question
Jefferies estimates second-quarter group adjusted EBIT of $2.5 billion and expects EV losses to moderate, with lower production allowing the company to focus on vehicle mix and avoid higher-cost aluminum sourcing. Separately, Ford is expected to report automotive revenue of $44.72 billion per Bloomberg consensus, with adjusted EPS of $0.36 on adjusted EBIT of $2.15 billion.
But the bigger question hangs over guidance, with investors focused on whether management follows GM, which raised its own outlook last week. Earlier in the month Ford reported a 10.3% drop in second-quarter US sales, to 549,200 vehicles, as electric-vehicle demand tumbled.
GM’s cash generation drives the second upgrade
For General Motors, Jefferies cited confidence that the automaker can keep strengthening its position in the US market and generate more than $10 billion in annual real free cash flow from 2027 onward. The firm raised its 2026-2028 estimates by about 6% and increased its price target to $99, above current levels of about $86.
Those gains rest on new vehicle launches, efficiency gains and greater diversification, with the analysts pointing to upcoming Silverado and Sierra truck launches, Super Cruise technology and potential growth from digital services. GM has also cut warranty expenses by $500 million in the first half of the year, while additional cost opportunities remain.
Both companies are positioned for improved earnings visibility, Jefferies wrote, with Ford trading at about 6.6 times estimated 2027 earnings and GM at about five times. A valuation re-rating could provide additional upside, the firm noted, although it is not required to support its price targets.
Sources: Proactive, Yahoo Finance
Trading involves risk.
Risk Disclaimer
