From Standard & Poor's Equity Research
Credit Suisse downgraded Ford Motor (F) to underperform from neutral, noting that the company said Friday it's reducing North American fourth quarter production.
Analyst Chris Ceraso says the move is intended to sharply reduce inventories in an effort to better align supply and demand, as well as reduce the need for heavy incentives. The analyst says the cut may also clear the way for Ford to accelerate closure of additional plants. Ceraso thinks a sharp reduction in truck production makes sense, but near term earnings per share (EPS) will suffer dramatically as plants likely can not be closed that fast, while reduced incentives will only offset a portion of reduced output. The analyst keeps a $6 stock price target.