In a disappointing turn of events, Ford Motor Company's stock experienced a significant drop of 17% after the company reported its second-quarter financial results. Analysts are expressing caution due to higher warranty costs and rising expenses impacting the company's earnings.

Higher warranty costs were a major factor in Ford's second-quarter earnings miss, causing concern among analysts. Despite this setback, analysts are praising Ford's Ford Pro segment, which is viewed as a unique asset for the company. However, there are some concerns regarding the electric vehicle segment.

Bank of America analyst John Murphy reiterated a Buy rating but lowered the price target from $22 to $20. Similarly, Goldman Sachs analyst Mark Delaney maintained a Neutral rating and reduced the price target from $14 to $12. RBC Capital analyst Tom Narayan maintained a Sector Perform rating with a price target of $13, while Piper Sandler analyst Alexander Potter reiterated a Neutral rating with a $13 price target.

According to Bank of America, the Ford Pro segment has continued to shine and helped offset weakness in the Ford Blue division. Murphy stated that despite the earnings miss, Ford's management remained optimistic about the company's recent progress. The analyst emphasized the importance of Ford Pro as the core of the company and its priority for capital allocation. Murphy pointed out that increased production capacity for the Super Duty in Canada signifies the company's commitment to this segment.

However, higher costs for the Ford Blue division, particularly due to warranty expenses, were a focal point for Goldman Sachs analyst Mark Delaney. Delaney noted that lower costs present an opportunity for Ford to narrow its EBIT margin compared to competitors. While the report may be considered disappointing by some investors due to the higher costs, Delaney acknowledged that Ford is taking positive steps to improve the long-term prospects of the business.

RBC Capital analyst Tom Narayan suggested that higher costs for Ford Blue might have impacted the company's decision to lower its guidance, which was expected by investors. Narayan anticipates a negative market reaction to these developments. Despite an upswing in the Ford Blue segment's EBIT, the Ford Pro and Model e segments experienced a downshift. While higher costs affected the Blue and Pro segments, the Model e segment demonstrated improved costs.

Analyst Alexander Potter of Piper Sandler highlighted that Ford's second quarter had "lots to like." However, the increase in warranty costs could continue to drive down the company's shares. Potter mentioned that Ford's EBIT remained flat quarter-over-quarter in Q2, while the revenue increased by 12%. The analyst revised their 2024 EPS estimate downward due to these factors and expressed uncertainty regarding the high end of the EBIT guidance range.

Following the disappointing earnings report, Ford shares tumbled 17% to $11.41 on Thursday. The stock is now down 6% year-to-date in 2024. This drastic drop highlights the concerns raised by analysts regarding higher costs and the impact on Ford's earnings.

Despite the challenges faced by the company, Ford's Ford Pro segment is viewed as a valuable asset, generating recurring revenue and maintaining a high EBIT margin. However, analysts caution the company regarding persistent quality issues and losses exceeding $1 billion per quarter in the Model e segment.

Investors will be closely monitoring Ford's efforts to address these concerns and improve its future prospects.

(Note: This news article has been generated based on the provided information. It may not include all relevant details and should not be considered a complete analysis of the situation.