Market Overview

GM Notches Upgrade On 'Resiliency,' Next-Gen Mobility

Share:
GM Notches Upgrade On 'Resiliency,' Next-Gen Mobility

General Motors Company (NYSE: GM) has been tagged a disputed leader in autonomous and electric consumer vehicles, and the perspective is gathering momentum.

The traditional automaker converted a bear to a bull Tuesday to tally its 13th Buy rating against eight Holds and three Sells.

The Rating

RBC Capital Markets analyst Joseph Spak upgraded General Motors from Sector Perform to Outperform and raised the price target from $51 to $52.

The Thesis

Optimism around General Motors is strengthened by the firm’s place in mobility services and a third-quarter earnings beat, Spak said. It's given RBC “increased confidence on downturn resiliency," he said in a Tuesday note. (See Spak's track record here.) 

“It remains to be seen if GM can win on the robotaxi opportunity, but it has a seat at the table,” Spak said. “And it's early enough in the story that we still see a lot of potential for that narrative to take hold and for growth/tech investors to look to GM, increasing demand for shares and potentially the multiple.”

Spak anticipates better-than-expected North American profitability driven by outperformance in pickup trucks. This factor alone justified an increase in RBC's 2018 earnings per share estimates for GM from $5.60 to $6.30 — 9 percent above consensus. It also reinforced confidence in a 10-percent margin target.

General Motors’ South American segment is also expected to recover, with a 40-percent reduction in its break-even point and an improved outlook for Brazil, Spak said. 

At the same time, RBC forecasts capital efficiency improvements through the T1 and GEM platform launches, the leveraging of China joint ventures and a pullback in investments in next-generation passenger cars.

Price Action

At the time of publication, General Motors was trading up less than 1 percent at $42.47.

Related Links:

Ford, GM Among The Top UBS Value Plays For 2018

Truck, Van Demand Drive November Auto Sales

Latest Ratings for GM

DateFirmActionFromTo
Jan 2020Initiates Coverage OnBuy
Nov 2019MaintainsOverweight
Oct 2019MaintainsNeutral

View More Analyst Ratings for GM
View the Latest Analyst Ratings

Posted-In: automotive Big Three Joseph Spak RBC Capital MarketsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (GM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
KHCUBSMaintains31.0
RPAYCantor FitzgeraldMaintains18.0
CMSCredit SuisseDowngrades
PBCTStephens & Co.Maintains15.5
TTECCowen & Co.Initiates Coverage On50.0
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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 vipaccounts@benzinga.com