Written by Cláudio Afonso | LinkedIn | X
Morgan Stanley analyst Adam Jonas issued a series of downgrades on Wednesday, lowering the firm’s rating on Rivian from Overweight to Equalweight and cutting the price target from $16 to $13.
Adam Jonas also downgraded General Motors (GM) from Equalweight to Underweight, with the price target adjusted to $42 from $47.
Additionally, Ford was lowered from Overweight to Equalweight, with its price target reduced to $12 from $16.
Regarding Ford, the analyst cited expectations of market share losses through the end of the decade, along with price/mix headwinds and risks related to regulatory compliance, electric vehicles (EV), autonomous vehicles (AV), and international markets. These factors, he said, could negatively affect profitability and valuation.
“We downgrade Ford from Overweight to Equalweight, cutting our price target from $16 to $12. Our downgrade reflects a lower outlook for normalized earnings and valuation, driven by reduced normalized EBIT margin and a 15.1% reduction in Normalized EPS,” Jonas wrote.
For GM, Jonas expressed similar concerns, including market share losses, price/mix pressures, and risks associated with China, regulatory compliance, and EV/AV developments.
“We downgrade GM to Underweight from Equalweight and cut our price target to $42 from $47. The downgrade is driven by expectations of lower profitability and valuation, with normalized EBIT margin and ‘Other’ income under pressure. Normalized EPS is reduced by 16.4%,” he noted.
Regarding Rivian, Jonas pointed to the increased capital intensity required for AV/ADAS technologies, which could affect future partnerships and capital expenditures.
“The downgrade reflects our incorporation of the capital intensity of AV/ADAS which may be required to fulfill the technological underpinnings that attracted Volkswagen as a JV partner; as such, we increase estimates of annual capex by $200-300mn per year beginning in 2026 (management has provided guidance of $1.2bn and $1.5bn for 2024 and 2025, respectively),” he wrote.
Last week, Rivian officially started shipping out models of its Gen 2 R1T and R1S EVs with the new tri-motor configuration.
Written by Cláudio Afonso | LinkedIn | X
