Deutsche Bank Sees Profits Peaking At General Motors

General Motors Company GM is poised to beat 2015 expectations, but its profit margins may have passed their peak, an analyst said Friday. Deutsche Bank's Kirill Babikov called the company's recent first quarter results "better than they looked" and predicted the shares will rise again, "once the dust settles." But Babikov maintained a Hold rating on GM and $38 target, citing "longer term concerns about peaking profitability." GM changed hands recently at $35.50, off about 3 percent since missing first-quarter expectations Thursday. Excluding a recall item, GM saw a $200 million decline in first quarter pricing in its North American operations, Babikov said. Quarterly results going forward will start comparing with last year's strong pricing gains in trucks, and although GM says it can raise prices on new passenger car models, the segment is highly competitive. "We're somewhat cautious" on that claim, Babikov said, adding that "deflationary pricing" raises worries about profit margins. GM's recent earnings miss stemmed solely from a higher-than-expected tax rate, according to Babikov, who said operating results were in line with the consensus. "We like the set-up for the second quarter," Babikov said, adding that GM is likely to soon resume buybacks under its $5 billion repurchase program unveiled last month, while its 4 percent dividend "offers some near-term support.