Market Overview

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

Related GM
Warren Buffett Is Bullish On Detroit
Automakers Flood Into Mexico, Creating New Economic And Investment Opportunities
GM's Cadillac to Open Global HQ in New York (Fox Business)

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
Sep 2014JP MorganMaintainsOverweight
Sep 2014Morgan StanleyReinstatesUnderweight
Aug 2014Credit SuisseInitiates Coverage onUnderperform

View More Analyst Ratings for GM
View the Latest Analyst Ratings

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

 

Related Articles (GM)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters