Goldman Sachs auto analyst Robert Barris issued a reprt today updating his outlook of Ford based on a recent deep dive into the financials and product plans.
“What’s changed?.” writes Barry.
“We have done a “deep dive” review of our assumptions for the 2007 to 2011 period, incorporating a more thorough consideration of Ford’s new UAW contract and our latest outlook for global auto demand.”
“Our 4Q2007 EPS rises to -$0.29 from -$0.39 to reflect modestly better pricing and more moderate assorted cost headwinds vs our prior forecast. Our 2008 and 2009 estimates move down to $0.50 and $1.00 from $0.65 and $1.10, respectively. US macro risk and a weak Ford product cadence keep our estimates biased to the downside as we move into 2008.”
Implications Ford’s global auto revenue is expected to grow by $9.8bn in the 2007 to 2011 period. We model growth in Europe and emerging markets, but see NA revenue falling $1.4bn, owing to share loss, market price pressure and mix shift towards smaller, generally lower priced vehicles.
“We model Ford realizing $4.5bn in structural cost reductions through 2011, including $4.0bn related to the new UAW contract, removing ACH employees, and buying out 10,000 employees in early 2008. However, variable cost is expected to grow $11.9bn on volume and content growth.”
Goldman doesn’t put a rating or target price on Ford.