Ford Stock (NYSE:F) Savaged With First Brands Bankruptcy

Legacy automaker Ford F -5.22% ▼ got hit with bad news back in fall, when word emerged that First Brands was filing for bankruptcy. The auto parts supplier offered its lineup to regular end users and to automakers alike, and reports suggest that Ford was one of the biggest victims of First Brands’ bankruptcy. That news hit investors like a punch to the gut, and Ford shares lost over 5% of their value in Monday afternoon’s trading.

Claim 50% Off TipRanks Premium

• Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions

• Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Reports suggested that 13% of First Brands’ sales were traceable to major automakers like Ford. This was sufficient for Ford to step in and help keep the company afloat. In fact, a subsequent report noted that Ford was actually the most exposed to First Brands, and stood to lose the most if First Brands went under for good. Four prospective buyers are making a play for what is left of First Brands, including a couple current Ford suppliers.

Ford was actually paying First Brands for parts in advance. One of Ford’s lawyers, Mark E. Freedlander, noted, “This may be the most expensive parts deal in the history of auto supply.” With First Brands representatives Patrick and Edward James currently facing nine counts that range from money laundering to wire fraud to “…running a continuing financial crimes enterprise…,” it is clear that Ford may be in some new supply chain trouble.

The Recall Was Almost Good News By Comparison

With this disaster sitting fresh on Ford’s collective stoop, word of a new recall that emerged targeting just 15,965 vehicles may almost have seemed like a relief. The vehicles in the question, mostly 2025 Transit vehicles according to reports, have an issue with their brake pedals. The issue is that they may become disconnected from the vehicle and stop functioning.

Word from the National Highway Traffic Safety Administration (NHTSA) is that the vehicles in question should not be driven at all until a new remedy can be put in place. But as ever, Ford’s dealerships will be right on the front lines, inspecting and repairing brake assemblies as required.

Is Ford Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, 12 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 50.05% rally in its share price over the past year, the average F price target of $13.81 per share implies 3.52% downside risk.

Disclosure

Disclaimer & DisclosureReport an Issue