DETROIT — There’s rising concern amongst Wall Avenue analysts that larger prices and provide chain disruptions will put stress on 2022 earnings for Common Motors and Ford Motor — much more than initially anticipated.
Forward of the Detroit automakers’ first-quarter earnings studies this week, a number of analysts cited such issues, together with inflation and components disruptions brought on by the coronavirus pandemic and the struggle in Ukraine, as considerations for the businesses and broader automotive trade.
JPMorgan analyst Ryan Brinkman on Monday trimmed first-quarter estimates for each GM and Ford for the second time.
“Commodity costs have since stabilized however stay elevated and risky and suppliers are certainly requesting larger costs from each GM and Ford to assist compensate for an rising array of non-commodity provide chain prices,” he stated.
JPMorgan now expects first-quarter earnings per share for GM of $1.52, down from $1.58 and beneath the $1.68 common of forecasts compiled by Refinitiv. It lowered its forecast for Ford to 41 cents a share, down from 52 cents however barely larger than the 38 cents per share anticipated by Refinitiv consensus estimates.
GM studies first-quarter outcomes after the market shut Tuesday, adopted by Ford on Wednesday.
Evercore ISI in a notice to traders final week stated it expects Ford to chop its 2022 outlook because of the rising variety of issues going through the corporate. It cited the corporate’s publicity to provide chain issues in Europe because of the struggle and the elevated price of aluminum utilized in its top-selling F-Collection pickups, amongst different points.
In early March, Ford reaffirmed its expectations of a pretax revenue between $11.5 billion and $12.5 billion for the yr. Nevertheless, provide chain issues have solely gotten extra advanced since then, in response to analysts.
GM beforehand forecast a pretax revenue of $13 billion to $15 billion for 2022, however Evercore ISI stated it is “not fairly clear” whether or not the corporate would undergo “a small potential reduce” to its top-end steering. GM has far much less publicity to Europe than Ford and different automakers however continues to face provide chain issues in China and North America.
BofA Securities analyst John Murphy stated, on the whole, preliminary steering by many automotive corporations is “now too optimistic” given the litany of issues going through the auto trade.
“Given the continued world semiconductor scarcity, incremental Covid-19 outbreaks and subsequent shutdowns in Asia, heightened geopolitical pressure due to the Ukraine-invasion, and a plethora of different provide chain disruptions, common sentiment throughout the trade (corporates, traders, and so on.) stays very cautious,” he wrote final week in an investor notice.
Europe-based BofA analyst Horst Schneider on Tuesday downgraded Stellantis from “purchase” to “impartial” on account of its publicity to Europe and provide chain issues.
Stellantis, which was fashioned by the merger of Fiat Chrysler and France-based Groupe PSA in January 2021, is scheduled to launch its first-quarter shipments and income on Might 5.
— CNBC’s Michael Bloom contributed to this report.