Jefferies upgrades Ford and GM, sees 22% upside on stronger outlook

Jefferies upgraded Ford Motor Co. and General Motors Co. to buy, seeing as much as 22% upside on stronger earnings and cash flow.

"The second quarter was a likely low point for Ford's volumes, with production set to normalize after supply disruptions," Philippe Houchois, analyst at Jefferies, said in a note dated Sunday.

Houchois raised his price target for GM to $99 from $90 and for Ford to $17.50 from $14.50. The new targets imply gains of nearly 20% for GM and almost 22% for Ford based on Friday's closing prices.

The upgrades come as GM reported second-quarter earnings and revenue that beat Wall Street estimates while raising its 2026 guidance. Ford is scheduled to report results after the market closes Tuesday.

For GM, Houchois cited stronger-than-expected second-quarter results and progress on warranty costs. The company saved about $500 million on warranty expenses in the first half of the year, and Chief Financial Officer Paul Jacobson previously indicated that matching industry leaders on warranty performance could unlock $2 billion to $4 billion in additional savings over time, the analyst said.

GM also raised its full-year pricing outlook to a 0.5% increase, the high end of its prior guidance range, according to Houchois. The outlook still allows for some softening in the second half as the company maintains leaner inventories ahead of new truck launches.

For Ford, Houchois said the second quarter likely marked a trough for vehicle volumes. Production should normalize after Novelis Inc. restarted its aluminum plant in New York last month, resuming supply of material used in Ford's F-150 pickup trucks after two fires halted operations.

"With US market conditions healthy, management could raise guidance at Q2," Houchois wrote.

Wall Street remains divided on Ford despite the upgrade. LSEG data shows 17 of 24 analysts covering the stock rate it a hold, with five recommending buy and two at underperform or sell. GM draws stronger support, with 22 of 31 analysts rating it buy or strong buy.

Ford shares have gained 9.5% this year, while GM stock has risen 1.6%.

The dual upgrade from a major Wall Street firm shows growing confidence that Detroit's largest automakers are navigating supply chain disruptions and tariff uncertainty more effectively than expected. Investors will watch Ford's second-quarter earnings report Tuesday for further signs of a turnaround.

This article is for informational purposes only and does not constitute investment advice.