November 11, 2010 05:43 AM Ford's stock price climbed 44 cents, or 2.7%, today to $16.51 after Morgan Stanley analyst Adam Jonas said the company's stock could be worth $30 if industry sales recover and the company gains market share.
Shares of Ford's stock have increased more than 60% this year and closed above $16 on Friday for the first time since June 2004.
"We've really fundamentally fixed our cost structure," Ford Executive Chairman Bill Ford said today on financial news network CNBC. "We've made $7 billion this year already in what would be historically in a very depressed automotive market."
When Alan Mulally joined Ford in September 2006, the company's stock was trading at about $8 per share and it lost about $30 billion from 2006 to 2008.
Since 2006 when Ford hired Mulally as president and CEO, the company has cut costs by selling brands and closing plants. It also has increased its market share in the U.S.
Now, Ford said that the company is hiring both in the United States and globally and plans to export its 2011 Ford Explorer, which will be built at the company's plant in Chicago.
"We actually view the U.S. as a growth market," Ford said. "We are going to be exporting the Explorer to 93 different countries."
Morgan Stanley's Jonas estimates that Ford is worth about $23 per share, but said that estimate is conservative and is based on modest industry and company forecasts.
"Our assumptions are also based on declining margins in South America and rather pedestrian assumptions for growth in other emerging markets, especially in China," Jonas said in his report. "In a modestly more bullish scenario, could Ford's fundamental operating performance justify a $30 share price? We think yes."
To get to $30 per share, Jonas said Ford would have to do the following:
* Improve its share of car and truck sales in the United States from 17% to 19%.
* Benefit from an economic recover and industry sales of 18 million by 2015, or 6.5 million more than the expected industry total this year.
* Sustain its North American profit margin at about 7% of total revenue.
* Maintain a profit margin in South America of about 7.5%.
Ford's stock hit $37 per share in March 1998 and $31 per share in early 2000 when the U.S. economy was in better shape and the automaker was a leading seller of SUVs.
For 2010, Jonas estimates that Ford will earn a profit of $8.8 billion. That would be the company's largest annual profit since 1998.