Bank of America Warns General Motors Shareholders to 'Buckle Up for a Bumpy Ride'
On Wednesday, Bank of America lowered the price objective for General Motors (NYSE: GM) from $46 to $43 and maintained the Buy rating.
Analyst John Murphy warns investors to “buckle up for a bumpy ride, as charges obfuscate 1Q results.”
Wall Street first quarter earnings per share estimates come in a wide range, likely because General Motors “will be recording numerous charges in its 1Q14 results,” said Murphy.
The main charges General Motors will face in the first quarter include:
- $1.3 billion of charges related to the ignition switch and other recalls that will be included in operating results.
- $300-400 million of restructuring charges (appx. $0.10-0.15/share) that will be included in operating results.
- $400 million of charts due to a currency exchange rate remeasurement in Venezuela that will be excluded from operating results.
Murphy lowered his first quarter earnings per share estimate from $0.50 to $0.01 and believes “the recall charges and the majority of the restructuring charges are non-recurring in nature and therefore should not be included in operating results.”
Shares of General Motors are up 0.9 percent to $34.55 in Wednesday's trading.
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