Ford shares gain the most in seven weeks on Tuesday, Brazilian factory closures to bolster profitability abroad, J.P. Morgan says

According to J.P. Morgan analysts, Ford Motor Co’s decision to shut three facilities in Brazil will allow it to trim losses and bolster profitability in its underperforming international segment.

“We expect the move to quickly reduce losses in its South American operations, for which we now model a breakeven result in 2020 compared with a loss of $300 million prior,” the analysts wrote in an investor note.

Ford shares closed higher for a second consecutive trading session in New York on Tuesday. It has also been the sharpest single-session gain since November 24th. The stock went up 5.16% ($0.48) to $9.78, after touching an intraday high at $9.81, or a price level not seen since July 24th 2019 ($10.35).

Shares of Ford Motor Company have risen 11.26% so far in 2021 compared with a 1.20% gain for the benchmark index, S&P 500 (SPX).

In 2020, Ford Motor Co’s stock went down 5.48%, thus, it underperformed the S&P 500, which registered a 16.26% gain.

The US auto maker said earlier this week that it expected to take pretax charges of nearly $4.1 billion related to plant closures in Brazil, with those facilities being under-used for a while because of COVID-19-related restrictive measures. 5,000 jobs will be affected, the company said.

Ford also explained that the move was part of a previously announced global restructuring for about $11 billion, of which it has already incurred a charge of $4.2 billion in Q3. The company expects to take another $2.5 billion charge in Q4 and a $1.6 billion charge in 2021.

Analyst stock price forecast and recommendation

According to CNN Money, the 16 analysts, offering 12-month forecasts regarding Ford Motor Company’s stock price, have a median target of $9.00, with a high estimate of $12.00 and a low estimate of $7.10. The median estimate represents a 7.98% downside compared to the closing price of $9.78 on January 12th.

The same media also reported that at least 13 out of 18 surveyed investment analysts had rated Ford Motor Company’s stock as “Hold”, while 3 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.