Analysts Optimistic On General Motors Following Barra's Comments & Guidance Update
Global Town Hall Meeting
On Thursday, General Motors held a Global Town Hall meeting to review former U.S. Attorney Anton Valukas' findings of his investigation.
CEO Mary Barra began by emphasizing, “as I lead GM through this crisis, I want everyone to know that I am guided by two clear principles: First, that we do the right thing for those who were harmed; and, second, that we accept responsibility for our mistakes and commit to doing everything within our power to prevent this problem from ever happening again.”
Valukas' report showed no “conspiracy to cover up the facts,” Barra informed, rather “a pattern of management deficiencies and misjudgments – often based on incomplete data – that were passed off at the time as business as usual.”
The CEO reported that 15 GM employees, including executives, had been fired.
Analysts Optimistic On Barra's Remarks & Management's Guidance
Following the meeting and slide deck, Deutsche Bank analyst Rod Lache emphasized General Motors report that the company is on, or ahead of prior EBIT 2014 guidance and promising international results.
The analyst remarked, “In discussing recent business trends GM suggested that Europe, China, and Consolidated International results were ahead of plan, offsetting weakness in SA; North America is on plan with minimal sales impact so far from the recalls (we would note that it is difficult to draw a conclusion given a number of unusual factors including recall related showroom traffic, and deliberate actions from Ford to temporarily constrain truck sales to fleets while they are capacity constrained).”
Lache sees investors being cautious on the automotive company near-term, despite the company's announcement that recall activity should be behind them by the end of the second quarter. Deutsche Bank maintained a Buy rating on shares.
Itay Michaeli, an analyst from Citigroup, also maintained confidence in General Motors. Michaeli interprets the overall news flow as “modestly positive.”
Citi wrote, "The only negative we see from the release is that again GM confirmed that recalls are likely to continue but should be substantially completed by the end of Q2; while additional recall-related changes are possible, which could be material, the cost is currently unknown until they have completed their analysis.”
Michaeli has a Buy rating and $47.00 price target on General Motors.
Friday's Stock Action
Shares of General Motors closed at $35.97 on Thursday.
The stock fell 0.62 percent following Friday's opening bell. Shares recovered and have continued to climb following the dip.
The stock is currently trading at $36.49, up 1.45 percent.
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