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Citigroup Sums Up In 2 Words Why GM's EPS Won't Collapse: Pickup Trucks

Citigroup Sums Up In 2 Words Why GM's EPS Won't Collapse: Pickup Trucks

Citi’s Itay Michaeli mentioned that the final May data points “confirm a strong month all-around for pickup trucks—including May used pickup pricing.”

Michaeli maintains a Buy rating on General Motors Company (NYSE: GM), with a price target of $50.

May Data Points

Similar to the April data, the May data supports the analyst’s view that pickups, which are estimated to comprise a majority of the company’s North American profits, represent a “fundamentally different market” to sedans.

New pickup truck sales grew 6 percent year-on-year in May, with midsize growing 15 percent and full-size growing 4 percent, on the whole outperforming the 2 percent gain of the overall industry in the month.

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Year-to-date, pickup sales have growth 5 percent, with midsize having increased 14 percent and full size at 4 percent, once again outperforming the overall automobile industry pace of 1 percent growth.

“May’s solid sales pace was again accompanied by higher new truck pricing as pickups experienced low-single digit YoY ATP gains building off mid-single digit gains in Q1,” Michaeli noted.

Manheim Index

Pickup truck prices also gained on the Manheim index, rising 6 percent year-on-year in May, significantly above the overall industry growth of 1 percent and representing the strongest growth among the major auto segments.

“It’s a story about a segment where many had definitively concluded that demand was permanently declining when it fact it was increasing all along. This remains overlooked, in our view,” the analyst added.

Latest Ratings for GM

Aug 2020CitigroupMaintainsBuy
Jul 2020Deutsche BankMaintainsBuy
Jul 2020BarclaysMaintainsOverweight

View More Analyst Ratings for GM
View the Latest Analyst Ratings


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