Citi: Buy GM
In a report published Friday, Citi analyst Itay Michaeli maintained a Buy rating on General Motors Company (NYSE: GM), with a price target of $50.
Analyst Itay Michaeli expects General Motors' stock to trade at a premium to that of Ford Motor Company (NYSE: F) by the end of this year. Michaeli added that robust 2Q results and a "reassuring" guidance could "serve as a turning point for sentiment."
In the report Citi noted the reasons to buy General Motors' stock as:
- Strong execution by the company in Q2, despite "a choppy macro" and upside to 2016 consensus
- Solid China results with "a reassuring yet realistic outlook." While China remained a risk, "Q2 should inject some comfort around GM's execution and investors' ability to better model pricing scenarios."
- Margins of around 10 percent at GMNA, which should allow the Street to be more confident about GMNA's 2016 margin target of 10 percent
- In Europe, a breakeven Q2 "should boost confidence in the 2016 glide path"
- Michaeli believes that the company can cross EPS of $5 next year.
- "Even if investors are unwilling to underwrite a 17mln SAAR, our conservatively constructed normalized EPS framework gets to $4.65"
- Investor Day scheduled in October could be a catalyst
- "Tech! - post Q2 the market might start focusing more on GM's overlooked tech leadership"
The EPS estimate for 2015 has been raised from $4.14 to $4.33. "We've gained some confidence around our 2016-17 estimates after the Q2 beat," Michaeli added.
Latest Ratings for GM
|Sep 2016||Nomura||Initiates Coverage on||Neutral|
|Sep 2016||Morgan Stanley||Upgrades||Equal-Weight||Overweight|
|Aug 2016||Jefferies||Initiates Coverage on||Hold|
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