UBS maintains Ford(F.US)'s "Neutral" rating: 2026 will be volatile, but the medium-term outlook is gradually becoming clearer

LootboxPhobia · 2026-02-12T10:48:25+00:00

UBS's research report on Ford Motor Company shows that the Q4 2025 performance exceeded expectations, boosting confidence with a target price of $15. The 2026 EBITDA guidance is above expectations, but there are risks related to execution, cash flow, market environment, and tariff assumptions. Although potential growth is promising, uncertainties in the automotive industry should still be watched. Performance in 2027 may improve, with EBITDA expected to surpass $12 billion.

LootboxPhobia

2026-02-12 10:48:25

Abstract generation in progress

UBS recently released a research report on Ford Motor Company (F.US), stating that the company’s Q4 2025 performance and 2026 outlook have increased confidence. Excluding the $900 million unexpected headwind from delayed tariff recoveries, the actual Q4 2025 EBIT will surpass expectations by 69%, demonstrating the company’s effective cost control. UBS maintains a “Neutral” rating on Ford with a target price of $15.

UBS notes that, after “normalization adjustments,” the 2026 EBIT exceeds the company’s guidance by approximately 20%, and the 8% profit margin target for 2029 is expected to support EPS of $2.90.

However, four major risks remain: 1) Execution is critical—high uncertainty in the auto industry, with potential variables such as raw material cost fluctuations from now until 2027 (not to mention 2029); 2) Actual free cash flow in 2026 (including EV-related cash expenditures) is close to zero; 3) 2026 performance is weighted toward the second half of the year, which aligns with industry logic but adds risk if market conditions underperform expectations; 4) UBS does not intend to overly “punish” Ford, but the company’s assumptions regarding 2025 tariff refunds are overly optimistic (more so than General Motors) and have not been realized, which could raise doubts among investors about growth potential in 2026.

Meanwhile, the 2026 performance guidance presents both pros and cons. The company projects an EBIT of approximately $9 billion, up $2.2 billion year-over-year, driven mainly by:

Cost reductions related to Novelis, estimated by UBS to be a $1 billion decrease (adding 150,000 units of capacity is estimated to generate $2.7 billion in revenue), offset by a $1.75 billion headwind from aluminum tariffs and logistics cost increases—this headwind is temporary and expected to reverse starting in 2027 (actually easing from the second half of 2026);
About $600 million improvement in Model E operations (narrowing losses of the first-generation product, but offset by incremental investments in the UEV platform and Ford Energy business);
Overall neutral on costs—tariff cost optimization, warranty, and material cost improvements contribute positively, but cyclical investments in product updates (Blue/Pro series) and rising commodity, raw material, and DRAM prices act as drag;
Slight improvement in Ford Pro software and services EBIT (UBS estimates an increase of $100 million); 5) Product pricing remains flat; 6) Lowered compliance credit costs contribute $500 million in benefits.

What are the potential growth opportunities and risks for 2026? UBS believes upside could come from pricing/product mix optimization, further cost reductions, and reduced investment scale; downside risks include increased market competition, supply chain challenges, and higher-than-expected warranty expenses. See the report for a detailed review of Q4 2025 results, guidance analysis, and the drivers behind 2026 performance.

However, normalized profit growth is expected to support stronger performance in 2027. Some believe that the actual starting point for 2027 should be $10.75 billion (company guidance plus temporary costs)—the market consensus is already at $10.4 billion.

Based on this, capacity and production of the Super Duty model are expected to increase in 2027 (benefiting Ford Pro), Model E losses will continue to narrow, reaching breakeven in 2029, and the Blue series product mix will further optimize (with more room for improvement in 2027 than in 2026). In an optimistic scenario, EBIT could surpass $12 billion.

Additionally, Ford reaffirmed its target of an 8% adjusted EBIT margin in 2029. Assuming low single-digit revenue growth (LSD%), UBS estimates that this corresponds to an EPS of about $2.90. However, it is important to note that the automotive industry is highly uncertain, and this target is only a long-term growth reference.

Looking back, for example, Ford set a 10% profit margin target for 2026 at its 2023 Investor Day, but the current guidance for 2026 is only about 5%.

UBS has raised its EPS forecasts for 2026 and 2027 from $1.49/$1.78 to $1.55/$1.86. However, due to more normalized current profitability, the firm has adjusted the 2027 P/E multiple from 8.5x to 8x. Although 8x remains slightly above the average forward 12-month P/E of 7.3x since 2022, considering the potential for upward revisions in future earnings, UBS believes this valuation level is reasonable.

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