Ford Recalls Vehicles; Shares Sink 2.9%

Shares of global automaker Ford Motor Company (F) sank 2.9% on Friday, July 16, closing at $13.61 following news that the company had recalled about 850,000 vehicles due to faulty parts. (See Ford Motor stock charts on TipRanks)

A total of 34,939 Ford F-350 Super Duty vehicles built from 2020-2021 were recalled for a rear axle housing spring seat interface weld issue. Customers were reportedly experiencing vibrations at high speeds and/or shuddering on acceleration.

Additionally, the disconnected driveshaft increases the risk of a crash in cases where the driver loses motive power or loss of transmission park function if the brakes are not applied properly.  

Furthermore, a total of 774,696 Ford Explorer vehicles made between 2013-2017 were recalled that may experience a seized cross-axis ball joint causing a fractured rear suspension toe link.

The said vehicles are said to experience a clunking noise or a misaligned rear wheel, which increases the risk of a crash due to diminished steering control.

There have been six allegations of injury related to this fault in North America.

Also, a total of 40,995 Lincoln Aviator vehicles made during 2020-2021 were recalled for improperly secured battery cable wire harnesses, which could probable the risk of a fire.

Ford said that over time, the A/C pulley may rub through the wire harness insulation and contact the unfused battery positive (B+) circuit, resulting in a short circuit and potential fire.

The company said it will issue notifications between July and August for dealer inspections.

Ford is expected to report its second-quarter results on July 28. As per Street estimates, the company is expected to report a loss of $0.31 per share on revenues of $23.66 billion.

Recently, BofA Securities analyst John Murphy maintained a Buy rating on the stock while lifting the price target to $18 (from $17), implying 32.3% upside potential to current levels.

Murphy states that the current automotive industry outlook is bleak due to the global semiconductor shortage, and expects Ford to perform better than expected in the second quarter.

The stock has a Moderate Buy consensus rating based on 9 Buys, 5 Holds, and 1 Sell. The average Ford price target of $15.73 implies 15.6% upside potential to current levels. Shares have gained 104.4% over the past year.

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