Citi: GM Truck Story Strong And Underappreciated

General Motors Company GM turned in mixed results in the second quarter, and investors were lukewarm on the automaker, but one sell-side analyst said Friday GM’s pickup truck story is unique and set for more success - but isn’t well understood.

The Analyst

Citi Research analyst Itay Michaeli reiterated a Buy rating and raised the target price from $67 to $68.

The Thesis

GM’s results are sustainable, Michaeli said, in part because pickup trucks, which are the majority of GM’s earnings per share, have undergone “years of structural demand explosion.”

Add to that a fleet age that suggests pent-up demand through 2024 and pickups appear less susceptible to industry disruption, and GM has a story that is “unique and compelling.”

Michaeli liked management’s confidence about the second half outlook, and while the consensus has GM turning in a year over year decline in 2020, Michaeli said Citi believes GM can grow EPS next year.

GM beat analysts’ estimates on earnings per share this week, but slightly missed Street expectations on sales.

Price Action

GM shares were slightly lower on Friday, down 0.9% to $39.77.

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