Analysts at Morgan Stanley and Credit Suisse are on the same page in their bearish stances on Ford (F), as both firms now rate the stock at sell-equivalent ratings. However, they differ a bit on “big 3” automaking peer General Motors (GM), as Morgan Stanley resumed coverage with an Underweight while Credit Suisse analyst Dan Galves said he prefers GM to Ford and keeps an Outperform rating on the stock.

SELL FORD: Credit Suisse analyst Dan Galves downgraded Ford to Underperform, the firm’s equivalent of a “Sell” rating, from Neutral. U.S. auto volumes appear to have peaked, the analyst stated. Many investors agree with that assessment, and either expect volumes to be flat going forward, causing automakers’ margins to drop, or predict that volumes will decline, Galves reported. Given investors’ current outlook and the sector’s position, it’s not a good time to own auto stocks, Galves warned. The analyst added that he expects Ford’s North American earnings before interest and taxes to come in below its guidance, and he set a $13 price target on the shares. Meanwhile, Morgan Stanley analyst Adam Jonas lowered Ford’s price target to $12 from $15 due to rising cyclical risks. The analyst said a majority of Ford’s profits are from North America, which presents negative earnings risk. The dependency on the U.S. economic cycle is significant and a downturn could bring margins below 0% for Ford and all U.S. OEMs, said Jonas. The analyst, who rates Ford an Underweight, acknowledges that Ford shares may appear cheap, but consensus estimates are too high and he does not believe earnings are sustainable at this point in the global auto cycle.

SPLIT ON GM: Morgan Stanley analyst Adam Jonas resumed coverage of GM with an Underweight, the firm’s equivalent of a Sell rating, citing the damage that an economic recession could cause the company. A recession could “substantially eliminate” the automaker’s profits and significantly increase its debt levels, the analyst believes. Moreover, Jonas does not expect GM to break even in Europe until 2017, and he concurs with the company’s belief that its business will deteriorate further in South America this year. Jonas forecasts only “modest growth” for GM in the East Asia region. According to Jonas, GM’s fiscal 2016 EPS will come in about 33% below $3.55, which he identified as the midpoint of the company’s guidance range. Conversely, Galves said he prefers General Motors to Ford, given continued cost saving efforts, a favorable 2016/2017 product cycle and its favorable U.S. inventory position. The Credit Suisse analyst keeps an Outperform rating on the stock.

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