Quick Response: 1Q14 EPS miss blamed on ‘accumulation of unusual factors’ that understate the underlying strength of business. Confirmation of FY14 guidance implies 1) stronger 2-4Q14 results; 2) upgrade for FY14 Asia & Pacific and Europe; downgrade for FY14 South America outlook.
We consider management’s FY14 guidance and the underlying market assumptions realistic and also conservative enough for the company to surprise on the upside in the next quarters. More importantly, we are of the opinion that Ford is well on track implementing its global growth strategy and should be able to resume earnings growth from 2015 onwards. We consider Ford a ‘fundamental’ buy with a medium-term target price of USD 20, but short-term technical headwinds for the sector, inclusively Ford should give investors renewed opportunity to buy into Ford at lower prices. (See p.3.)