Ford Now Expects $2 Billion Q1 Loss, Turns To Junk Bond Market For Funds


Full results for the first quarter, including estimates of the economic effects of the COVID-19 pandemic on the business, will be released on April 28.

To boost liquidity, Ford is now looking to raise unsecured bonds in three parts. According to a Bloomberg report, the bond with the longest maturity, a 10-year security, will be marketed at a yield of around 11%, according to a person with knowledge of the matter.

Although the company now has a junk-rating from major agencies Moody’s and S&P, its bonds remain eligible for the Federal Reserve’s corporate bond buying scheme.

“We expect 2020 [industry] fundamentals to be very challenging cyclically,” wrote Goldman Sachs analyst Mark Delaney on April 15. “Investors [should] be selective with the group and own stocks that we expect to benefit from key long-term secular growth areas like EVs [electric vehicles].”

The analyst initiated coverage of Ford with a Hold rating, writing: “We see broad-based downside to Street estimates.”

Indeed, Bank of America’s John Murphy believes that worse is to come for Ford in the second quarter. Based on the automakers rate of cash burn (which could total $8 billion since the end of last year), Murphy said his $2.5 billion estimated Q2 loss for the company may now look a little light.

However the analyst ultimately reiterated his F buy rating as he believes macro pressure has now been accounted for by the stock’s 45% drop year-to-date.

Overall, analysts have a Hold consensus on Ford stock, with an average price target of $7 (32% upside potential). In the last three months the stock has received 9 hold ratings vs just 2 buy ratings and 2 sell ratings. (See F’s stock analysis on TipRanks)

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