Target Prices for Ford and GM Are Slipping. Tesla Is Holding Up Better.

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Wall Street is taking a less upbeat view of the stock-price outlook for

General Motors

and

Ford

Motor, considering factors such as cost inflation, rising interest rates, and persistent parts shortages. Sentiment on

Tesla

stock is proving more resilient.

Monday, Citigroup analyst Itay Michaeli was the latest to adjust his numbers for GM (ticker: GM) and Ford (F).

Michaeli lowered his estimate of GM’s 2022 operating profit to $13.9 billion from $14.7 billion, while management has forecast a result between $13 billion and $15 billion. He cut his target for the stock price to $95 from $100, though he still calls GM his top pick.

Higher costs, weakness in its Chinese business, plant downtime due to a lack of semiconductors, plus the need to spend more on self-driving technology following a recent decision to increase its majority stake in Cruise Automation via a deal

with SoftBank

(9434. Japan), are behind the GM cuts.

The issues facing Ford are similar, setting the spending on Cruise aside. The company also has a European business, which could be affected by the Russia-Ukraine war, while GM doesn’t.

Michaeli lowered his estimate for Ford’s 2022 operating profit to $11.6 billion from $12.2 billion, putting it at the low end of the range of $11.5 billion to $12.5 billion management has predicted. His price target for Ford stock, which he rates at Hold, went to $18 from $23.

Michaeli didn’t change his call on Tesla (TSLA) Monday. He rates shares at Sell and has a target of about $310 for the price, which is less than one-third of its current level.

Over the past two months, the average Ford stock-price target has fallen by about 50 cents, to near $21.50 a share from $22. The average call on GM stock has slipped a little less than $4, to about $72.30 a share from $76. Those cuts amount to roughly 2% and 5% of the starting target prices, respectively.

The reductions are small, but investors have reacted with a lot of caution. Coming into Monday trading, Ford stock was down about 18% over the past two months, while GM shares had lost 16%. The

S&P 500
is up about 4% over the same span.

Tesla shares haven’t faced the same headwinds. Coming into Monday trading, the shares were up 10% over the past two months. The average stock-price target has dropped about $9 a share over that span, but that is a decline of less than 1%, a little smaller than the cuts in Ford and GM’s targets.

One reason for Tesla’s resilience is that some Street estimates about the EV maker’s underlying performance have been going up. Friday, RBC analyst Joseph Spak, for instance, increased his estimate for Tesla’s first-quarter deliveries to more than 325,000 vehicles, from roughly 316,000.

Rising estimates can help support any stock, just as falling estimates do the opposite.

Ford and GM shares were up 0.5% and 1% in early trading Monday, while the

S&P 500
gained 0.1%. The

Dow Jones Industrial Average
was off 0.3%, while Tesla shares gained 6.1% after the company said was is considering a stock split.