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Bank of America Warns General Motors Shareholders to 'Buckle Up for a Bumpy Ride'

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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.

Latest Ratings for GM

DateFirmActionFromTo
Jul 2015Credit SuisseUpgradesUnderperformNeutral
Jul 2015SusquehannaMaintainsNeutral
Jul 2015BarclaysDowngradesOverweightEqual-weight

View More Analyst Ratings for GM
View the Latest Analyst Ratings

Posted-In: Bank of America John MurphyAnalyst Color Price Target Analyst Ratings

 

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