Shares of Ford Motor Co. on Friday gained nearly 2 percent after the struggling automaker posted a surprise second-quarter profit, prompting Wall Street analysts to forecast a faster turnaround and a narrower loss for the year.
Ford's better-than-forecast second-quarter shows the potential beginning of earlier turnaround traction, with particularly strong North American net pricing performance, said Lehman Brothers analyst Brian Johnson.
Johnson is now forecasting a narrower 2007 loss for Ford of 62 cents per share from his earlier estimate of a loss of $1.77. He expects Ford to lose 23 cents a share in 2008.
Ford on Thursday posted a profit of $750 million, its first in two years, on improved auto business and cost-cutting in its troubled U.S. operations.
In an update on its turnaround, Ford said it is on track to have a lower cash outflow due to its restructuring than the $17 billion it had previously forecast for the period 2007 through 2009, reflecting slightly lower restructuring costs and better operating results.
(The) second quarter evidenced credible progress on Ford's North American restructuring, said Goldman Sachs analyst Robert Barry, who now expects Ford to lose 90 cents per share for this year. He earlier forecast a loss of $1.75 per share.
JP Morgan analyst Himanshu Patel said Ford's earnings were boosted by a combination of a strengthening pricing environment in North America and its strategy to reduce low-margin sales to car rental companies.
Patel narrowed his 2007 loss forecast for Ford to $1.49 per share from $2.15 per share.
Analysts said they expect Ford to gain from the continued momentum of cost savings and net price increase in North America and for its European luxury brands through the rest of the year and in 2008.
Ford, which is on the verge of losing its No. 2 spot in the U.S. market to surging rival Toyota Motor Corp., is in the midst of a sweeping restructuring that includes closing 16 plants and cutting nearly 45,000 jobs.
Ford shares were up nearly 1 percent, or 7 cents, at $8.16 in afternoon trade on the New York Stock Exchange. The shares touched an earlier intraday high of $8.35.
(Reporting by Poornima Gupta)