Market Overview

Buckingham Research Cuts GM Targets, Sees 10 Percent Downside


In a report published Thursday, Buckingham Research Group analyst Joseph Amaturo maintained a Neutral rating on shares of General Motors Company (NYSE: GM) while slashing his price target to $28 from a previous $37 to reflect continued moderation of growth in China and expectations for "deteriorating" pricing in North America.

Amaturo said the recent "rout" in Chinese equity markets is likely to impact consumer confidence and spending in the country. In addition, the analyst is "concerned" about the downward pressure these trends, along with continued expansion in industry production capacity, will exert upon pricing.

As such, the analyst is now estimating a 10 percent decline in Chinese production volumes and a 2 percent deterioration in Chinese pricing that will be split evenly through the remainder of 2015 and 2016.

Switching to the North American market, Amaturo noted that continued weakness in the euro, yen and won also leads to concerns over continued price deterioration in North America. As such, the analyst is now expecting a 3 percent decline in North American pricing in 2016 after previously assuming flat pricing. In addition, the analyst is now expecting the company to post a 7.2 percent North America EBIT margin in 2016, down from his previous 8.0 percent estimate.

Estimate Changes

Amaturo revised his full year fiscal 2015 and 2016 earnings per share estimates to $3.72 (from a previous $3.88) and $3.11 (from a previous $3.92), respectively. EBITDAPO (Earnings Before Interest, Tax, Depreciation, Amortization and Postretirement) is now estimated to be $14.7 billion in 2015 (down from $14.9 billion) and $12.8 billion in 2016 (down from $14.4 billion).

Finally, the analyst's revised Automotive 2015 free cash flow estimate has been lowered to $3.0 billion (from $3.2 billion) in 2015 and also lowered to $1.9 billion (from $3.2 billion) in 2016.

Bottom line, even at a $28 price target, shares of General Motors would offer a 5.1 percent dividend yield. While this may seem attractive, the analyst argued that other stocks (such as AT&T Inc. (NYSE: T) with a 5.41 percent yield) "carries much less operating leverage" than General Motors.

Latest Ratings for GM

Jan 2021Argus ResearchUpgradesHoldBuy
Jan 2021Nomura InstinetUpgradesNeutralBuy
Nov 2020Morgan StanleyMaintainsOverweight

View More Analyst Ratings for GM
View the Latest Analyst Ratings


Related Articles (GM)

View Comments and Join the Discussion!

Posted-In: automobiles Buckingham Research Car Pricings General Motors China General Motors North America Joseph AmaturoAnalyst Color Analyst Ratings

Latest Ratings

TSLAJP MorganMaintains125.0
INTCTruist SecuritiesMaintains64.0
FBTruist SecuritiesMaintains320.0
AAPLCowen & Co.Maintains153.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at