Evercore Sees New Value In GM Cruise, Upgrades On SoftBank Investment

General Motors Company GM was off to a good start Thursday, with a strong SoftBank investment bolstering the firm’s prospects in autonomous vehicles.

A sell-side upgrade extended the stock’s rally. 

The Rating

Evercore ISI analyst George Galliers upgraded GM from In Line to Outperform and increased the price target from $47 to $50.

The Thesis

Ahead of the SoftBank announcement, Evercore had assigned no value to General Motors’ Cruise assets. But the segment’s new $11.5-billion valuation, coupled with SoftBank’s 19.6-percent stake, merits attention.

The analysts accordingly adjusted their sum-of-the-parts model to reflect an $8-per-share value in GM’s standalone Cruise unit. They also attribute 60 cents to GM’s Lyft stake with a six-times multiple, as opposed an earlier seven-times multiple, on the company’s core business.

With a 25-percent discount to Cruise and Lyft assets, Evercore anticipates a higher price potential.

Price Action

At the time of publication, GM shares were trading up 10.2 percent at $41.69.

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Chevrolet Bolt EV autonomous test vehicles at General Motors Orion Assembly in Orion Township, Michigan. Photo by Jeffrey Sauger/courtesy of General Motors.