Ford Stock Is Upgraded. What the Company Didn’t Say That Did It.

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Shares of auto giant

Ford Motor

have been upgraded. A big reason why is what the company didn’t say at its investor day Monday in Dearborn, Mich.

Daiwa analyst Jairam Nathan raised his rating on

Ford

stock to Hold from Sell late Wednesday. His price target stayed at $12 a share.

“Focus on what was not mentioned during investor day,” wrote Nathan, adding there was no mention of the Ford Escape or Lincoln. “These non-mentions suggest potential restructuring among nameplates and brands to be likely within the Blue segment.”

Ford Blue is the name of Ford’s traditional, gasoline-powered car business. Restructuring and product lineup simplification can mean lower costs and better margins down the road.

Nathan also liked what he heard about Ford’s commercial business, called Ford Pro. “We believe Pro could grow faster as an independent company,” wrote Nathan.

Ford has restructured itself into three new divisions: Blue, Pro and the EV business called Model e. Ford Pro is generating about $50 billion in sales a year and plans to grow its service offerings, hopefully adding to both sales and profit margins. That process is easier now as its own segment with its own management. It’s also easier for investors to see how Pro is doing with results published for each segment.

Pro’s goal is to double profit margins, to about 14% from about 7%, over the coming few years. “Improvement beyond 2023 will likely be led by higher software and service [sales],” wrote Nathan. “Blue restructuring and Pro’s intrinsic valuation are likely to support the stock price around current levels.”

Ford stock was up 1% in premarket trading Thursday. The market was higher in early trading too, with

S&P 500
and

Nasdaq Composite
rising 0.7% and 2%, respectively.

Nvidia

(NVDA) stock was up 27% in premarket trading after reporting earnings Wednesday. Sales guidance for the current quarter was much better than expected.

An upgrade to Hold, of course, doesn’t change the number of analysts who rate Ford stock at Buy. Only 35% of analysts covering Ford stock rate shares a Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 53%. Rising interest rates and falling new car pricing have impacted enthusiasm for most car stocks in recent months.

About 13% of analysts covering Ford stock now rate shares at Sell. The average Sell-rating ratio for S&P stocks is less than 10%.

Coming into Thursday trading, Ford shares have fallen about 3% this year and have declined about 11% over the past 12 months.