Jefferies Comments on Ford (F) Sell-Off Following Q3

Jefferies trimmed its price target on Ford (NYSE: F) from $15 to $14 following Q3 results, but kept its Buy rating.

The firm noted shares sold off yesterday despite Q3 upside related to: : (1) 4Q margin concerns, (2) some non-cash hedging losses, and (3) the lack of a dividend announcement.

On Q4 margin pressures, the firm notes: (a) UAW ratification bonuses will be expensed in 4Q; (b) the new Ford Escape will drive some product launch costs, albeit less so than launches in the year-ago quarter; and (c) input costs continue to tighten.

On hedging losses, the firm notes: 3Q experienced $350 million (or $0.08/share) of non-cash hedging losses, as Ford's commodity hedges worked against GAAP EPS in the quarter (albeit without a cash impact).

On the dividend, the firm notes: That the company closed the UAW contract and was upgraded to a BB+ credit rating, but no announcement followed, likely drove some event-driven money out of the stock.

Commenting on where the stock goes from here, the firm said, "While the stock lacks a near-term catalyst, we think an accommodative tape sets up the group overall as an attractive trade into year end."

For more ratings news on Ford click here and for the rating history of Ford click here.

Shares of Ford closed at $11.87 yesterday.

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