Ford Motor (F) shares rose 13% in Wednesday trading after Morgan Stanley said the company had a "fairly high likelihood" of signing energy-storage solutions supply agreements with large commercial customers, including hyperscalers, in the next few months.
Ford's licensing agreement with China's Contemporary Amperex Technology, or CATL, is a "key competitive differentiator" that is not fully understood by investors and has been overlooked, Morgan Stanley said Tuesday in a report.
The technology licensed from CATL, which is the world's premier energy storage manufacturer, offers Ford the opportunity to allocate capital into a strategic growth area and participate in a fast-growing and relatively high-margin energy-storage market, the report said.
Morgan Stanley estimates Ford Energy could generate $500 million to $600 million of run-rate EBIT at 20 GWh of production, with potential upside if capacity expands to meet demand.
Ford is set to become one of the US suppliers compliant with the Foreign Entity of Concern rule with proven technology, allowing it to qualify for a 30% investment tax credit, which is an underappreciated competitive advantage, the report said.
Morgan Stanley has an equal-weight rating on Ford stock with a price target of $14.
Price: $13.59, Change: $+1.60, Percent Change: +13.30%