Investing

Has BofA Securtities Picked a Winner Among 9 Automaker Stocks?

While there are differences among financial analysts and industry analysts about just how much trouble the auto industry is in this year, nearly everyone agrees automakers will sell fewer new cars in the United States in 2022 than their early forecasts for 2022 predicted.

Industry analysts at Cox Automotive have cut their forecast for 2022 U.S. new car sales from 16.0 million to 15.3 million, citing new coronavirus lockdowns in China and the Russian invasion of Ukraine as driving a new round of supply bottlenecks. Cox estimated a 2021 U.S. sales total of about 15.1 million units.

Analysts at Bank of America Securities expect U.S. new car sales for 2022 to total 13.9 million units, down from 14.6 million in 2021, a decline of 7%.

On Wednesday, we looked at BofA’s rating and price objective changes on several parts suppliers to the auto industry. Here we look at the nine automakers in the analysts’ coverage universe. Of that number, six manufacture only electric vehicles (EVs), and while BofA has given two of those six a Buy rating, only two received increased price objectives in the April 6 revision.

Among the three legacy automakers in BofA’s universe, all three are Buy-rated. One received a boost to the stock’s price objective, one remained unchanged and one price objective was lowered.

All six EV makers included in BofA’s universe were noted as having a high volatility risk rating, an indicator of potential price fluctuation. The three legacy automakers had medium volatility risk ratings.

Ford Motor Co. (NYSE: F) is a Buy, according to BofA. The analysts lifted their price objective on the stock from $30 to $32. At a recent price of around $14.80, the upside potential on Ford stock is about 116%.

The analysts based their Buy rating on a “micro earnings inflection … driven by the confluence of a favorable product cycle in the all-important US/NA market and benefits from its Global Redesign restructuring efforts, in addition to the ongoing macro recovery underway in the global automotive cycle.” The price target increase is the result of Ford’s “increased credibility and improving execution.”

Ford’s annual dividend of $0.10 represents a yield of 2.71% and the stock’s total return over the past year is 17%.


General Motors Co. (NYSE: GM) is also rated a Buy. The stock’s price objective was lowered from $100 to $95, implying an upside of 149% based on a recent trading price of $38.10.

As with Ford, the price objective tilts toward the high end of the stock’s trading range, but GM’s “recent change in momentum” accounts for the lower objective. The analysts base their rating on GM’s “ongoing execution and strength in its Core business [enabling] the company to step up its investments across EVs and AVs, further Future-proofing the business. Along these lines, GM continues to develop all the necessary components for the future of mobility services, which we believe may help unlock value over time.”

GM has suspended its dividend, and its total return over the past year is negative 37.5%.

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