Ford Motor can make up ground after significantly underperforming competitor General Motors , according to Morgan Stanley. Adam Jonas, a well-known auto analyst at the investment bank, said Ford remains his top pick in the auto sector. That is despite the stock sliding around 2% over the past 6 months, while GM shares have climbed about 34% during the same period. What is even more eye-catching is for 18 days over April and May, the six-month performance gap widened to over 40 percentage points between the two stocks. There have only been two other times since the revamped, postfinancial crisis of GM’s 2010 initial public offering that one of the stocks has outperformed the other by that large a gap. F GM 6M mountain Ford vs. General Motors over the last 6 months One straw in the wind is that the gap has narrowed since late May. Now, Jonas said Ford could take the spotlight as the focus within the sector shifts from electric vehicle investment to capital discipline. It comes at a tumultuous time for automakers as they grapple with softer-than-anticipated electric vehicle demand. As the excitement around EVs has cooled, investor interest has turned instead to how car companies will preserve cash. “We see an opportunity for Ford [to] narrow the gap by moving the needle toward capital discipline,” Jonas told clients in a Monday note. Given an ongoing “unwind” in the electric vehicle story, he said Ford has the potential to flip the stock performance. It would be similar to what happened during the “wind-up” for EVs seen in 2021, when Ford outperformed after doubling down on its commitment to electrics, he noted. Jonas said Ford is unlikely to institute a share buyback campaign similar to the one that launched GM’s outperformance since late 2023. But he said Ford can preserve capital and find ways to return extra cash to investors. Though Ford is his top pick, he has overweight ratings on both of the automakers. Ultimately, he said Ford earned the crown because of its potential to improve incremental capital use and then return that excess money to shareholders. Jonas’ $17 price target for Ford implies the Detroit-based company’s stock can rally around 39% over the next 12 months. That would mark a turn for the stock, which is little changed for the year.
