Ford Motors "neutral," target price reduced - update

09/08/04 - Banc of America

NEW YORK, September 8 (New Ratings) - Analyst Ronald A Tadross of Banc of America Securities maintains his "neutral" rating on the Ford Motor Company (F), while reducing his estimates for the company. The target price has been reduced from $15 to $14.

Ford Motor Company manufactures and sells cars, trucks and related parts.

According to Banc of America Securities' research note published yesterday, the returns from the company’s pension fund have been lower-than-anticipated so far this year. The company is expected to have witnessed 2% returns on its pension assets, as compared to the expected level of 8.75%, the analyst elaborates. The consequent increase in the company’s 2005 pension expenses is expected to restrict Ford Motor’s growth prospects, the analyst adds.

Ford Motors has $54 billion in pension assets, of which 70% has been invested in stocks, according to Banc of America Securities. The company is expected to make a decision soon regarding a cut in the prices of its products and reduce its capacity substantially, the analyst adds. Ford Motor’s market share is expected to decline from the current 20% to 18% by 2008, the analyst mentions.

The EPS estimate for 2004 is $2.05, while the estimate for 2005 has been reduced from $1.85 to $1.80, respectively. The P/E estimates for 2004 and 2005 are 6.8x and 7.8x, respectively.

Banc of America Securities maintains its "neutral" rating on the Ford Motor Company.