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Citi: Buy GM

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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:

  1. Strong execution by the company in Q2, despite "a choppy macro" and upside to 2016 consensus
  2. 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."
  3. 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
  4. In Europe, a breakeven Q2 "should boost confidence in the 2016 glide path"
  5. Michaeli believes that the company can cross EPS of $5 next year.
  6. "Even if investors are unwilling to underwrite a 17mln SAAR, our conservatively constructed normalized EPS framework gets to $4.65"
  7. Investor Day scheduled in October could be a catalyst
  8. "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 2016NomuraInitiates Coverage onNeutral
Sep 2016Morgan StanleyUpgradesEqual-WeightOverweight
Aug 2016JefferiesInitiates Coverage onHold

View More Analyst Ratings for GM
View the Latest Analyst Ratings

Posted-In: CitiAnalyst Color Reiteration Analyst Ratings


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