Ford stock hits the jackpot with latest move, Morgan Stanley says

Ford’s stock caught fire this week after the company debuted Ford Energy, a new partnership with EDF that will see the company deliver up to 20GWh of battery energy storage systems for utility-scale and data center customers starting in 2028.

The agreement with EDF combines “industrial-scale manufacturing discipline with full lifecycle accountability,” with the venture’s flagship product being a 20-foot containerized 5.45 MWh system using 512 Ah LFP prismatic cells with liquid-cooled thermal management called the Ford Energy DC Block.

The new product makes Ford a player in the AI infrastructure market, and Wall Street responded very bullishly to the news. The stock rose modestly on Tuesday, closing up 0.23% to $13.06 per share.

“This agreement with EDF power solutions validates the market’s need for a BESS supplier that combines industrial-scale manufacturing discipline with full lifecycle accountability,” said Lisa Drake, president, Ford Energy. “We are not simply delivering hardware. We are delivering the kind of predictable quality and long-term operational confidence that grid operators and large-scale developers require. Ford Energy was purpose-built to serve customers who cannot afford uncertainty in their energy storage supply chain.”

Photo by AaronP/Bauer-Griffin on Getty Images

Ford’s BESS announcement is a bullish sign for the company

Analysts at Morgan Stanley estimate that Ford Energy will generate incremental EBIT of $600 million annually, helping offset losses from its electric vehicle division.

The firm states that it expects Ford’s foray into battery-electric storage systems (BESS) to be successful, as its announcement with EDF power solutions “is the first of several potential large customer announcements this year.”

Morgan Stanley’s bull case on $21 assigns a higher multiple to the Ford Energy business than to the company’s automotive operations. The firm estimates $2 per share of equity value for Ford Energy on top of $13 per share for the core auto business.

“As Ford executes additional contracts with high-quality customers, potentially data centers, we expect the multiple to expand closer in line to other energy storage peers (25-40x), which could push the stock closer to our $21 bull case,” analyst Andrew Percoco said.

Ford’s unpredictability gives BNP Paribas analysts pause

Ford topped BNP Paribas’ revenue expectations ($43.3 billon vs. $41.7 billion), adjusted EPS expectations (66 cents vs. 18 cents), and adjusted EBIT ($3.5 billion with 8.1% margin vs. $1.2 billion with 2.9% margins), but the firm maintained its neutral rating and $13 price target anyway.

BNPP is more concerned about the multiple headwinds the company is facing, including rising commodity prices, the continued fallout from the Novelis supplier plant fire, and investments in Model e, than the multiple tailwinds the company has at its back.

“We expect the shares to trade lower… amid Ford’s high quarterly earnings volatility, and, at times, unpredictability, with its ’26 revised guidance now implying a -$2B reduction to 2Q-4Q adj. EBIT (-25% lower) vs. its prior outlook. This compares to just an -8% revision to GM’s implied 2Q-4Q guidance change,” BNPP auto research analyst James Picariello said in a note emailed to TheStreet.

“We understand Ford’s moving pieces to the guide with respect to favorable 1Q cost timing that now proves more pronounced over the remainder of the year, and of course, the IEEPA refund, as well as the additional commodity/metals costs that are now hitting OEMs. But it’s the sheer magnitude of Ford’s financials, when they move, that continues to temper our full confidence behind the Co.’s future earnings trajectory.”

Ford’s tailwinds for the year include the $1.3 billion tariff refund the company expects to receive after the Supreme Court struck down a portion of President Donald Trump’s tariffs. That one-time benefit led the company to raise its guidance, but BNPP analysts don’t believe it’s enough to lift the company’s rating.

Meanwhile, Ford itself is also expecting commodity costs to add a $2 billion headwind to its efforts this year, up from its previously stated $1 billion, driven by higher aluminum prices.

Related: This is how Ford CEO Jim Farley “future proofs” F-Series trucks

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