Citi On GM's Plummeting Stock: 'This Is Not The Time To Hold Anything Back'

Shares of General Motors Company GM fell more than 12.5 percent over the past three weeks, and sentiment still looks pretty bearish. Nonetheless, in a report issued Monday, Citi analysts Itay Michaeli and Justin Barell reiterated a Buy rating and $50.00 price target on the stock.

The experts note that, while “some overhangs are clearly legitimate (China, Greece),” others (like the U.S. sales “miss” in June) seem blown out of proportion.

They highlight the importance of the next few weeks, surrounding the announcement of the company’s second quarter results, scheduled for July 23, for it to -once again- get “in front of investors.”

Expectations & Reality

For the second quarter, Citi expects GM to “convey a reassuring but realistic picture highlighting both solid execution but also incremental macro headwinds in SA & China.” The analysts think that, while guidance will likely be trimmed for both regions, the magnitude will be close to what they anticipate.

Moreover, they expect management to maintain “all-important 2016 targets of 10% GMNA margins and GME profit.”

According to the note, the shares already seem to be pricing-in a substantial reset of the company’s 2015 and 2016 global outlook, a scenario the analysts do not see as likely for the second quarter. However, they consider this not to be enough.

Instead, they want to see management aggressively offset the recent market sentiment with more detail on developments in China, prospects in South America, restructuring savings in GMIO & Russia, and the upcoming GMNA product cycle, plus a technology teach-in.

“This is not the time to hold anything back,” the analysts conclude.