Piper Sandler has reaffirmed its Overweight rating on Ford Motor Company (NYSE: F) and maintained its $16.00 price target, citing potential improvements in warranty costs as a major upside catalyst for 2026. The target implies nearly 18% upside from Ford’s current share price of $13.61.
The firm noted that Ford has long faced quality-related challenges, spending more on warranty costs than General Motors as a percentage of vehicle price in 24 of the past 27 quarters. This trend is reflected in Ford’s relatively weak gross profit margin of 7.55%, according to InvestingPro data, suggesting that warranty expenses continue to weigh on profitability.
Piper Sandler estimates that if Ford successfully addresses these quality issues in 2026, the company could generate up to $2.8 billion in incremental EBIT compared with 2025. This would translate into a year-over-year EPS increase of approximately $0.54. Despite its challenges, Ford currently trades at an attractive P/E ratio of 11.64 and offers a strong free cash flow yield of 22%, based on InvestingPro figures.
The firm also expects any earnings improvement to be supported by continued strength in Ford Pro, which it views as Ford’s highest-margin business and one that benefits from exposure to the housing market.
Additionally, Piper Sandler anticipates that EV-related losses will improve year over year, driven by lower spending on regulatory credits and reduced structural costs following recent write-downs. As a result, the firm has labeled Ford its “favorite idea for 2026.”
In other news, Ford is recalling 116,672 vehicles in the U.S. due to an electrical issue that could increase the risk of fire, according to the National Highway Traffic Safety Administration. The recall stems from a potential electrical short circuit that may pose a fire hazard.
Separately, Ford is reportedly in discussions with Chinese automaker BYD about a possible partnership to source batteries for certain hybrid models. One option under consideration involves importing BYD batteries for use at manufacturing facilities outside the United States, though details are still being finalized.
Meanwhile, Ontario Premier Doug Ford has criticized a new Canada–China trade agreement that lowers tariffs on Chinese electric vehicles, warning it could harm Canadian workers. Former White House trade official Peter Navarro has also questioned Ford’s rumored talks with BYD, criticizing the strategy of partnering with a Chinese competitor.
In contrast to Piper Sandler’s bullish view, UBS analyst Joseph Spak has maintained a Neutral rating on Ford with a $12.50 price target, following the company’s announcement of three new technology initiatives, including an AI assistant and a next-generation advanced driver-assistance system (ADAS) platform.
