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Another Morgan Stanley 'Best Idea'

Investors are scratching their heads after Morgan Stanley called one stock a ‘best idea’ with estimates 40% above consensus.

We’re talking about the bank's call Monday in which analyst Adam Jonas initiated coverage of Ford with an 'Overweight' rating and a $20 price target citing strong revenue opportunities.

Considering the stock has trouble getting above $13, the call raised eyebrows to say the least.

Fast Money was so intrigued by the call we invited Jonas to join us on Fast Money’s Halftime Report.

He told us there are three factors behind his lofty price target – which is, again 40% higher than consensus. They are:

- Strong US volume, 14 million units in 2011 (1 million above consensus)
- Less negative on Europe, Ford’s second biggest market
- Ford credit, extremely low loss ratios and a collapse in funding costs.

"These factors help take the company from $5 billion of net auto debt to $16 billion of net cash by 2016, Jones says. "If we're right Ford should achieve an investment grade credit rating and resume a dividend payment far sooner than the market anticipates."

Should you follow the advice?

This is an incredibly aggressive call, says Zach Karabell. I'm skeptical.

I happen to like Ford but the $20 price target seems like a stretch, adds Guy Adami.

I’d think there would be some pressure on the stock with the GM IPO coming, muses Pete Najarian on the Halftime Report. But I can tell you I’m seeing a lot of interest in the Ford 15 calls. That suggests a positive tone in the options world.

Ford is a frustrating trade, adds Steve Grasso on Friday's Halftime Report. Typically Ford stays above $12 but doesn’t seem able to break above $13.

If you're looking for a trade in the space, I'd look at longHonda, says Joe Terranova



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Trader disclosure: On Oct. 4, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (GS), (INTC), (MSFT), (C), (NUE), (BTU); Adami's Wife Works At Merck ; Karabell Owns (AAPL), (FCX); Jon Najarian Is Selling (Aapl) Puts; Jon Najarian Is Long (Lvs); Jon Najarian Is Short (Lvs) Calls; Jon Najarian Is Long (Mgm); Jon Najarian Is Short (Mgm) Calls; Jon Najarian Is Short (Mos) Calls; Jon Najarian Is Short (Mos) Puts; Jon Najarian Is Long (Wynn); Jon Najarian Is Short (Wynn) Calls; Joe Terranova Is Long (EOG), (APA), (AAPL), (OIH), (VRTS), (XBI), (ARUN), (IBM), (XBI), (C), (ORCL), (PEP), (OXY), (SU), (JOYG), (RIG), (IBM), (HES), (RSH), (UPL); Stephen Weiss Owns (NIHD); Stephen Weiss Owns (SLE); Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST); Karabell Owns (AAPL), (GOOG), (RIMM), (C), (GS); Kinahan Owns (MSFT), (YHOO), (C), (WFC), (SPY); Najarian Owns (YHOO); Najarian Owns (WFC) Put Spread; Najarian Owns (F) Bonds; Najarian Owns (F) Call Spread; Najarian Owns (CNI); Najarian Owns (VLO); Najarian Owns (PFE); Najarian Owns (TEVA); Najarian Owns (NOV); Najarian Owns (GDXJ); Najarian Owns (DD); Najarian Owns (DO); Najarian Owns (POT) Call Spread; Najarian Owns (BUCY) Call Spread; Najarian Owns (NTAP) Call Spreads; Najarian Owns (AKAM) Call Spreads; Najarian Owns (NVLS) Call Spreads; Najarian Owns (BCSI) Call Spreads; Najarian Owns (AKAM) Calls

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AMGN)
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

For Zach Karabell:
Karabell's Firm Is Long (WCN)
Karabell's Firm Is Long (MSFT)
Karabell's Firm Is Short (SPY)
Karabell's Firm Is Short (QQQQ)

For Mike Khouw
Cantor Fitzgerald Is A Market Maker In (ADM)

For Vance Edelson
Morgan Stanley Owns 1% Or More Of (EXBD), (URS)
Morgan Stanley Has Advised On A Public Offering Of (RSG), (WM)
Morgan Stanley Has Received Compensation For Inv. Banking services from (RSG), (RHI) (URS), (WM)
Morgan Stanley Makes A Market In Shares Of (RSG), (URS), (WM)

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