GM Reignites Street Confidence In 'Key Quarter' For Automaker

Following General Motors Co.’s GM better-than-expected fourth-quarter financial results, Wedbush analyst Dan Ives kept an Overweight rating on the stock, noting that he anticipated renewed Street confidence moving forward.

What To Know: GM reported fourth-quarter revenue of $43 billion Tuesday morning, which beat the consensus estimate of $38.97 billion. The Detroit-based automaker reported adjusted earnings of $1.24 per share, which beat estimates of $1.16 per share.

GM also guided for 2024 adjusted earnings of $8.50 to $9.50 per share versus estimates of $7.83 per share as the company focuses heavily on profitability coming into 2024.

“This was an important quarter to help regain Street confidence that has been shaken the last few quarters with the EV vision in flux and the Cruise black eye over the past few months,” Ives said in a new note to clients.

Although demand concerns have cast a shadow over the EV industry as a whole in recent months, GM’s profit margin and growth targets appear to be on track, Ives said, adding that this was a “key quarter” for the Street to gauge the company’s resilience.

Despite a murky backdrop for the EV sector, GM is planning to launch six new EV models in 2024. The company also said it plans to spend about $1 billion less on its Cruise division. The Wedbush analyst highlighted the company’s measured approach around the pace of the EV shift and noted he would be looking for more insights into the consumer demand trajectory for 2024 on the conference call.

“Importantly, honing in on the EV transformation, the company expects to be EV variable margin positive in 2H24 with mid-single digit EBIT EV margin in 2025, including the benefits from the clean energy tax credits,” Ives said.

Ives maintained GM with an Outperform rating and price target of $40 on Tuesday.

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GM Price Action: GM shares are up approximately 33% over the past three months. The stock was up 7.56% Tuesday morning at $38.07 at the time of writing, according to Benzinga Pro.

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