Commentary

Ford Motor Company Stock Upgraded

Not all U.S. headquartered car companies are so desperate they want a bailout. Ford Motor Company has been going it alone with its reserves. As a result, Goldman Sachs upgraded its stock to a “buy” and added it to its list of “conviction buys.”

In a surprising bit of good news, Goldman Sachs (GS) announced that it has upgraded the Ford Motor Company (F) from neutral to buy, and has added the automaker to its “conviction buy” list. In the process, Goldman also set a price target of $6 on Ford stock, a significant increase over its current price of $3.80. Upon the news, Ford’s shares rose over 14 percent, to $4.34, in mid-day trading.

Part of Goldman’s reasoning for the change lies in its belief that Ford won’t need a government bailout. Despite suffering a recessionary downturn, the automaker has held off on requesting federal funds, unlike its fellow automakers, General Motors (GM) and Chrysler. Although Ford acknowledged that it might need help in the future, its decision to hold off on accepting a government handout has raised its profile in the auto industry.

I’ve blogged on Ford’s resilience during the downturn previously, also noting that the CEO is an explicit admirer of Toyota. My colleague Anthony Randazzo has also blogged on Ford’s progress here.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and managing director of the DeVoe L. Moore Center at Florida State University in Tallahassee where he teaches graduate and undergraduate courses in urban planning, regulation, and urban economics. Prior to joining Florida State, Staley was director of urban growth and land-use policy for Reason Foundation where he helped establish its urban policy program in 1997.