Weekly Wrap: iPhone Lives; Ford Idles

Jeremy Glaser: Ford taps the brakes, Apple shows the iPhone is alive and well, and can Coke kick-start growth? This time on Morningstar's Weekly Wrap.

Ford shares tumbled on Thursday after results, and our auto analyst, David Whiston, thinks the firm will continue to face short- and medium- term headwinds.

David Whiston: So on Thursday Ford reported second-quarter results. And in some ways they were good numbers, such as an 11.3% North American op margin being a pretty robust  number. The results still badly missed consensus, the stock was down as much as nearly 10% Thursday morning, and on top of that, management, as good as they are, I think they're going to have a lot of problems overcoming a lot of headwinds in the second half of the year and even into 2017. You've got Super Duty retooling starting, that's going to add a lot of cost in the second half of the year. You've got a lot of foreign exchange problems, especially in light of Brexit. You've got a Chinese market that gave Ford some problems in the second quarter, unlike GM actually. Ford specifically cited stronger competition from the Chinese brands. And then finally the plateauing U.S. market that's forcing higher incentive spending in North America. Albeit Ford was coming off a low incentive base in 2015, it still really bit into results, and that's going to continue in the second half of the year. So I've cut the fair value to $15. I like GM better than Ford right now. I've got a $48 fair value estimate on GM. They seem to be--for now at least--avoiding some of these pitfalls that Ford suffered in Q2, but time will tell how it all plays out.

Glaser: Coke disappointed, but our Adam Fleck thinks the firm can return to faster growth.

Adam Fleck: We've maintained our $44 per share fair value estimate for wide-moat Coca-Cola, following what immediately were pretty challenging second-quarter results. Organic revenue growth of 3% was fairly similar to the first quarter, but the mix was very different. It was driven entirely by positive price realization as beverage volume growth fell to flat year over year. The company is seeing continued emerging-markets challenges, particularly in large countries such as China. However, we still believe that Coke can grow its revenue above 5% annually over the long run, driven by a cyclical rebound in those emerging-markets growth rates as well as continued rational pricing between the company and its competitors in the more developed economies.

Glaser: Apple's results this week seem to have shown the market that its best days were not behind it.

Brian Colello: Apple reported third-quarter earnings on Tuesday that were a little bit ahead of expectations. I think, ultimately, the were less bad than feared by the market. The market reacted positively, up 7% that day. Fourth-quarter forecast is also in line with expectations. The iPhone sold about as well as expected. The upside came from the iPad, actually. It was the iPad Pro, iPad selling at a higher average selling price because of that higher priced iPad Pro, so that was really a positive for the upcoming quarter. Now, this isn't the quarter where we should be expecting tremendous news out of Apple because the new iPhones are coming in early September anyway, so this is the sale of the older products for the most part. But, in general, we're going to be looking to the iPhone 7 coming in early September for further signs for our bullishness on Apple. We're still at a $133 fair value estimate, stocks trading at about $104, so we still upside in the name.

Glaser: Other tech firms had a good quarter, too, with Facebook and Google parent Alphabet showing the ad market remains robust and Amazon posting another profit.

And in case you missed it, check out Dan Culloton's look at 10 up-and-coming and under-the-radar funds.