Shares of Ford Motor Co. (F) tumbled to their lowest level in more than a year Monday after the No. 2 U.S. automaker said its profits in 2005 and 2006 would fall well short of its previously stated goals.

Ford lowered its full-year profit forecast on Friday to $1.25 to $1.50 per share from $1.75 to $1.95 per share. The company also said it doesn't expect to reach its goal of hitting $7 billion in pretax profits by 2006.

Ford shares fell 67 cents, or 6.1 percent, to $10.36 Monday on the New York Stock Exchange (search). Before Monday, they had been trading in a 52-week range of $10.94 to $16.48.

Merrill Lynch analyst John Casesa continued to rate Ford neutral in a research note Monday. He said Ford's action was expected, but that the magnitude of the cut was surprising. Casesa is predicting an 8 percent decrease in the automaker's second-quarter production — an announcement that could come as soon as April 20, when Ford releases its first quarter results.

Casesa said Ford likely won't see much relief until the second half of the year, especially since Ford will have to follow rival General Motors Corp. this spring and ramp up incentive spending.

"Given rising raw material prices, rising health care costs and increases in other inputs, the automotive value chain is being compressed not only from the top down, but also from the bottom up," Casesa said.

Standard & Poor's (search) on Friday lowered its outlook on Ford from stable to negative.

Ford faces many of the same problems as rival General Motors Corp. (GM), which warned last month that it will post its weakest first-quarter earnings since 1992, and profits this year could miss forecasts by as much as 80 percent.

The two companies, despite a spate of new vehicles in the past year, have struggled with medical and materials expenses and the continuation of heated competition with foreign automakers, particularly Asian brands such as Toyota Motor Corp. (search) and Nissan Motor Co. (search)

"The industry dynamics that Ford and GM face are similar: high material costs, high legacy costs, declining market share, lackluster product cycle success," said John Kollar, auto credit analyst for HSBC Securities.

Ford's 2005 revised outlook comes as it continues to lose market share to domestic and Asian rivals. The company's U.S. sales have declined 5.2 percent so far this year.

Ford said it does expect first-quarter earnings to exceed its previous guidance of 25 cents to 35 cents per share. Analysts are looking for earnings of 36 cents per share when Ford reports first-quarter results next week.

"Although one of our strongest ever product line-ups has been well received by consumers around the world, we are not immune to the broad economic challenges we all face in our industry," Ford Chairman and Chief Executive Bill Ford Jr. (search) said in a statement.

"Obviously there are actions we could take to achieve our pretax profit goal of $7 billion for 2006, but we will not mortgage Ford's future by chasing an objective set under vastly different market and economic conditions," he added.

The $7 billion target was viewed as a crucial milestone in the 5-year turnaround plan Ford launched in January 2002, when the industrial icon was teetering on the brink of collapse.

"Historically high prices for steel and crude oil, escalating health care expenses and a weak U.S. dollar presented formidable challenges as we entered 2005," Chief Financial Officer Don Leclair said in a statement.

Ford said those pressures have intensified, while aggressive price competiton continues in the U.S. auto market.

Reuters and the Associated Press contributed to this report.