Ford Motor Company (NYSE: F) is facing significant headwinds as its shares dropped 3.3% in premarket trading to $8.40 following a downgrade from Bernstein. The brokerage firm has revised its rating on Ford from ‘market-perform’ to ‘underperform’ and slashed its price target from $9.40 to $7, citing growing concerns over the impact of vehicle tariffs and weakening consumer sentiment.
The downgrade comes at a critical time for Ford, as the company prepares for the commencement of vehicle tariffs, with parts tariffs expected to follow within a month. Bernstein analysts have warned that the “significant downside” to Ford’s stock is not yet fully reflected in its current price. As tariffs intensify, the pressure on Ford’s shares is expected to increase, further complicating the automaker’s recovery efforts.
While Ford faces lower headwinds compared to its primary competitor, General Motors (NYSE: GM), it starts from a less favorable position. Bernstein projects that Ford’s earnings per share (EPS) will remain broadly flat between the second quarter of 2025 and the first quarter of 2026. This stagnation is attributed to the challenges posed by tariffs and a potential decline in consumer demand.
In a more lenient scenario outlined by Bernstein, Ford’s high share of U.S. production could help the company avoid some of the tariff impacts. However, a stricter interpretation of “U.S. content” requirements could more than double the tariff impact on Ford, exacerbating the challenges the automaker faces in the coming months.
The broader automotive sector has also been under pressure, particularly after China announced retaliatory tariffs last week. This development has raised concerns about the potential escalation of a global trade war, which could have far-reaching implications for U.S. and Canadian auto sales. An auto advisory firm based in Detroit has forecasted that sales in these markets could decline by nearly 2 million vehicles this year if trade tensions continue to escalate.
As of Monday, General Motors shares were down 1.7% in premarket trading, reaching $41.77. Year-to-date, Ford’s shares have declined approximately 11%, while GM’s shares have fallen by 20%. The ongoing uncertainty surrounding tariffs and trade relations is weighing heavily on investor sentiment, leading to increased volatility in the automotive sector.
Ford’s management will need to navigate these turbulent waters carefully as they work to mitigate the impact of tariffs and bolster consumer confidence. The company’s ability to adapt to changing market conditions and respond to the challenges posed by tariffs will be crucial in determining its future performance.
In conclusion, Ford’s recent downgrade by Bernstein highlights the growing concerns surrounding the automaker’s stock amid impending tariffs and weakening consumer sentiment. With shares under pressure and a challenging market environment, Ford faces an uphill battle in the coming months. Investors will be closely monitoring the situation as the company seeks to stabilize its performance and regain market confidence in an increasingly competitive landscape.
