Ford Motor Company F) saw a depressing 2012 second quarter, with a sharp 39% fall in profits to $0.30 per share and 6% drop in revenues to $33.3 billion due to lower operating results in all regions except North America. Further, it expects market share in the U.S. and Europe to be lower than 16.5% and 8.3%, respectively, in 2011 and overall pre-tax operating profit to be lower than 2011 compared with the prior guidance of tallying.
We are also concerned about the company's higher structural costs and economic weakness around the world. Therefore, we continue with our Underperform recommendation on the stock and set a target price of $8.25.
The current P/E, which is close to the lower end of the historical range, is at a 31% discount to the peer group for 2012. Our $8.25 target price, 6.2x 2012 EPS, reflects our Underperform recommendation.