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Ford gets downgraded on rising SUV competition from GM

  • Nomura Instinet lowers its rating for Ford Motor to neutral from buy.
  • The firm believes the automaker will lose sport utility vehicle sales to General Motors in the coming year.
  • Ford shares have underperformed the market this year. Its shares declined 9.9 percent year to date compared with the S&P 500's 10.4 percent return through Thursday.

A difficult year for Ford Motor shareholders will not get better anytime soon, according to Nomura Instinet.

The firm lowered its rating for the automaker's shares to neutral from buy, saying the company faces share losses due to rising competition in its profitable sport utility vehicle market.

"Strong branding had allowed Ford to gain share and stave off competition in midsize SUVs, despite aging products. Going forward, we see competitors succeed in gnawing away at Ford's lead in the segment," Nomura Instinet analyst Anindya Das wrote in a note to clients Friday. "In full-size pickups, we expect the model cycle to start to turn against Ford in 2019."

Ford shares have underperformed the market this year. Its shares declined 9.9 percent year to date compared with the S&P 500's 10.4 percent return through Thursday.

Das reduced the firm's price target to $11.60 from $14.80 for Ford Motor shares, representing 6 percent upside from Thursday's close.

The analyst cited new sport utility launches from General Motors such as the Chevrolet Equinox, GMC Terrain, Buick Enclave and Chevrolet Traverse in the coming year. Das predicts Ford will lose sales to these more competitive vehicles.

As a result, the analyst lowered the firm's 2017 forecast for Ford U.S. unit auto sales to a decline of 4 percent from down 1 percent.

"The Trump administration's decision to drop plans for a border-adjustment tax means Toyota/Nissan/Honda are no longer exposed to additional tariff risks, compared to Ford," he wrote.

Ford did not immediately respond to a request for comment.

— CNBC's Michael Bloom contributed to this story.