GM Still Riding Strong Truck Demand, But What's Down The Road?

General Motors Company GM turned in mixed first-quarter earnings as it continues to ride strong light truck demand. Morgan Stanley remains along for the ride right now, but cautious about what’s down the road.

The Analyst

Morgan Stanley’s Adam Jonas reiterated an Overweight rating on GM with a $44 price target.

The Thesis

GM reported adjusted EPS of $1.41, topping the $1.09 Street estimates. Sales of $34.9 billion narrowly missed analysts’ $35.03 billion estimate.

Right now, GM is doing well from strong truck and SUV demand, though Morgan Stanley doesn’t think that will last.

“However, as long as the sun is shining, we look for GM to use the dividends from its US pickup and SUV lineup (however fleeting) to attack structural and purchasing costs to have a chance to hold profits as volume slows and as the China dividend continues to decline,” Jonas wrote in a note.

Electric vehicle investment is going to be needed soon, as well as investment into self-driving cars, which also may not help the stock down the road. Jonas said Morgan Stanley’s revised forecasts call for GM profit to drop by roughly a third by 2022 versus 2018, assuming there’s no recession.

Price Action

GM shares traded around $38.28 Thursday afternoon.

Related Links:

Ford Beats GM To Invest $500M In Rivian, Enter Strategic Partnership On EVs

Tesla Forecasts Autonomous Robotaxis In 2020

Posted In: Auto Industryautonomous vehicleselectric vhiclesGMAnalyst ColorAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.