Ford upgraded to Buy by UBS on improving earnings outlook

Ford Motor Company shares rose 3.6% after UBS upgraded the stock to “Buy” from “Neutral,” arguing the market is underestimating the company’s earnings potential over the next several years.

UBS upgrade and price target

UBS reiterated its 12-month price target of $15, implying nearly 24% upside from the stock’s level of about $12.10. The firm’s upgrade is based on growing confidence that Ford can deliver earnings per share (EPS) above $2 by 2027.

UBS cited analysts’ projection of $2.08 EPS for 2027, which is about 17% higher than consensus estimates. The firm also said the market appears to be pricing in roughly $1.73 in 2027 EPS, about 16% below UBS’s forecast.

What UBS says is driving the earnings outlook

UBS argued that recent pressure on the stock—linked to concerns about higher gasoline and aluminum prices—may be overstated. The firm noted that aluminum costs are largely hedged for 2026 and that other headwinds should ease over time, adding: “Transient headwinds dissipate in 2H26E.”

EBIT guidance and tariff-related drag

Ford’s 2026 guidance for earnings before interest and taxes (EBIT) is $8 billion to $10 billion, equivalent to roughly $1.30 to $1.70 in EPS. UBS highlighted that this outlook includes a $1.75 billion drag tied to tariffs and logistics disruptions following a fire at a domestic aluminum supplier.

With the facility expected to return to operation in the second half of 2026, UBS projected underlying 2027 EBIT rising to between $9.5 billion and $12 billion. That translates to approximately $1.60 to $2.05 in EPS, even before additional improvements.

Potential upside catalysts

UBS pointed to possible benefits from increased truck production, cost efficiencies, and tariff-related tailwinds. The analysts also suggested Ford could land at the higher end or exceed its 2026 guidance, supported in part by an estimated $0.8 billion benefit from tariffs that were later ruled illegal.

Longer-term path to higher EPS

Beyond 2027, UBS described a “march towards $3 in EPS power” later in the decade. The firm attributed the longer-term thesis to a mix of factors, including a stronger product portfolio, a more pragmatic electric vehicle strategy, and a potentially more favorable US regulatory environment.

Battery energy storage systems as a growth lever

A key element of UBS’s longer-term view is Ford’s expansion into battery energy storage systems (BESS). The company plans to invest about $2 billion to convert a Kentucky plant to produce 20 gigawatt-hours of lithium iron phosphate battery capacity for the energy storage market.

UBS estimated the BESS segment could generate margins of around 10%, compared with roughly 5.5% for Ford overall in 2026. If scaled successfully, the business could contribute about $0.8 billion in incremental profit by the early 2030s, or roughly $0.15 per share in earnings.

Software and valuation approach

UBS also pointed to Ford’s higher-margin software opportunities within its commercial “Pro” segment as another potential driver of profitability.

Despite the more optimistic earnings view, UBS kept a conservative valuation stance, maintaining its $15 price target based on a 7x price-to-earnings multiple. The firm said this is broadly in line with Ford’s current forward multiple and slightly below its historical average, indicating the upgrade is driven by earnings expectations rather than multiple expansion.