Analysts: Ford is still safer investment
Even as shares of Ford's stock dropped 3.3% today in the wake of General
Motors' highly publicized stock offering, experts said the Dearborn
automaker is the safer investment.
"Ford has proven itself at this point while GM still has a little ways
to go," said Ronald Humenny, founder and president of Starfire
Investment Advisors in Southfield.
Ford's stock closed today at $16.12 per share, down 56 cents, or 3.3%.
Many had expected Ford shares to slide as GM began trading again for the
first time in 17 months.
"Before the IPO, Ford was the only game in town if you wanted to invest
in the American car industry," said Efraim Levy, equity analyst for
Standard & Poor's. "Now you have options."
In its first day of trading, shares GM's stock closed at $34.19, up
$1.19 from the initial $33 offering price.
Unlike GM, Ford didn’t tap federal funds, and gained favor with the
public as GM went through bankruptcy. But GM’s stock offering helps the
U.S. government recoup up to $13.5 billion of its nearly $50 billion
“Ford took a different path, we arrived at the same location — we’re
viable companies,” GM CEO Dan Akerson said today. “At this stage of the
game, the best car wins.”
Wall Street analyst Joseph Amaturo today downgraded his recommendation
on Ford stock from a "buy" rating to a "neutral" rating. However, he
said the downgrade was only in response to Ford's recent stock price
Ford's stock price has soared 58.5% since the beginning of the year as
the company's profits have increased. Ford earned a profit of $6.4
billion the first nine months of this year.
"The stock price has appreciated close to our price target," Amaturo
said in his report. "We continue to believe Ford is the best positioned
domestic manufacturer with the best product cycle as well as a superior
Veteran Wall Street auto analyst MaryAnn Keller also said earlier this
week that Ford is viewed as a company that has successfully completed
its restructuring while GM still must fix its European operations.
For that reason, Keller said, Ford will be looked at as a solid
long-term investment. GM, she said, is a larger company with a stronger
balance sheet but must still prove that its management team is stable
and that it can successfully restructure its European operations.
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