NEW YORK -- Shares of Ford Motor Co. on Wednesday rebounded from an 11-year low, after UBS Warburg analyst Saul Rubin raised his rating to "neutral" from "reduce," saying the market was "unduly pessismistic" about Ford's short-term prospects.
At close of New York Stock Exchange trading Wednesday, Ford shares rose by 7.3 percent, or 48 cents, to $7.08.
Ford shares fell 39 cents each Tuesday to $6.60, their lowest level since Nov. 1991.
Over the past month, investors have reacted to a stream of bad news surrounding the world's second-largest automaker, including weak U.S. industry sales, Ford's decision to withhold a second-quarter production forecast and continuing doubt that Ford can meet its financial targets this year, especially in a weakening economy.
Ford's bonds, the most widely held of any U.S. corporation, have also taken a dive in recent weeks amid worries of another credit rating downgrade and warnings from an Egan-Jones analyst that the company would be bankrupt from its roughly $125 billion in debt if it were not for the Ford name.
In a research note, Rubin said the fears of bankruptcy were incorrect. Of the $125 billion, the majority has been generated by its financing business, which analysts say has ample access to the asset-backed securities market for its borrowing needs. The automotive business has only $19 billion in debt, with $25 billion in cash.
"The bottom line here is only that we do not believe there is a real threat of imminent bankruptcy, and yet it appears that the fear that that is possible is pervading the markets at this point in time," Rubin said.
But Rubin said he had not changed his view that Ford would struggle to meet its targets of breakeven profits in its automotive unit and corporate profits for 2003 of 70 cents a share, or roughly $1.2 billion, after losing $6.4 billion over the past two years.
"Our generally bearish attitude toward Ford in terms of business fundamentals is left unchanged," he said.