Market Overview

Seaport Global Initiates General Motors At Buy, Positive On Profitability Prospects


Seaport's Michael Ward initiated General Motors Company (NYSE: GM) at Buy with a $42 price target following the company's earnings beat in late July. The analyst noted several reasons for his upgrade.

  • GM's breakeven level in North America was at a historical low, Chinese initiatives were accelerating.
  • European operations have continued to improve.
  • General Motor's balance sheet was in great shape allowing the company to generate an estimated $5 billion in surplus operating cash annually according to Ward.

Related Link: Jefferies Initiates General Motors At Hold, Sees Limited Upside In Lieu Of 'Peak Cyclical Conditions'

Investors ‘Fixated' On Past Performance

"We believe investors are fixated on past performance for the industry, but actions taken by GM over the last few years have positioned the company to be consistently profitable through the cycle, in our view," stated Ward.

On 2017 expectations, Ward expected EPS of $5.40 reflecting a payback in Chinese Government tax incentives and conservative margin estimates in North America.

Ward formerly had a Buy rating on General Motors with a $46.00 price target while working for Sterne Agee CRT before joining Seaport.

At time of writing, General Motors traded at $31.20, up 1 percent Tuesday.

Latest Ratings for GM

Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Credit SuisseMaintainsOutperform

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