Analysts revise General Motors stock price target after earnings

Here's what could happen next to GM shares.

Apr 25, 2024 - 06:30

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Analysts revise General Motors stock price target after earnings

Austin Powers isn't the only one getting his mojo back.

The satirical Sixties-era spy, created and portrayed by Mike Myers in four films, was rendered "shagless" in one of the flicks by Dr. Evil--also played by Myers--before bouncing back and restoring his most precious essence.

And there's at least one stock analyst who sees a similar story being played out by General Motors (GM) , which produced some shagadelic first-quarter results on April 23.

Revenue and earnings outpaced Wall Street analyst's predictions, with net income rising more than 25% on strong deliveries of pickup trucks and other higher-profit vehicles.

"Around the world, we are very focused on growth and profitability, which means taking full advantage of our winning product portfolio to grow share without chasing unprofitable business," Mary Barra, chairman and CEO, told analysts during the carmaker's earnings call.

The performance has many GM stock analysts racing to overhaul targets.

Mary Barra, CEO of General Motors
Anna Moneymaker/Getty Images

GM delivers impressive first quarter results

Revenue totaled $43.01 billion, up from $40 billion a year ago and surpassing FactSet's call for $41.94 billion.

The iconic automaker earned $2.62 per share for the quarter, up from $2.21 a year ago, beating the FactSet consensus of $2.13 per share.

The company boosted its 2024 guidance and now expects adjusted earnings of $12.5 billion to $14.5 billion, or $9 to $10 per share, up from a previous range of $12 billion to $14 billion, or $8.50 to $9.50 per share.

GM also raised expectations for adjusted automotive free cash flow to a range of $8.5 billion to $10.5 billion, up from an earlier forecast of $8 billion to $10 billion.

EV sales up sharply, says GM's CEO

Barr said that electric vehicle production rose sharply, "and our dealers translated that into a 21% year over-year-increase in EV retail customer deliveries."

She noted that the Cadillac Lyriq outsold all EVs from European luxury brands in the first quarter. She said that since mid-March, "we are now delivering Chevrolet Blazer EVs with updated and improved software."

Cruise, GM's self-driving vehicle company, recently returned to action in Phoenix after its permit to test and operate driverless vehicles was pulled in California.

"The team is back on the road in Phoenix updating mapping, gathering more road information," Barra said. "This is a critical step for validating our improved self-driving system and building upon the more than 5 million driverless miles we've logged before the pause."

"We are engaging frequently with regulators and stakeholders and building trust as we regain momentum," she added. "Safety will remain front and center and will guide our progress."

Several Wall Street investment firms responded enthusiastically to GM's results.

Wedbush analyst Dan Ives, for example, didn’t hold back his feelings about GM’s results.

In a research note entitled, “The Mojo is Back at the GM Story,” Ives boosted his price target to $55 from $45 per share “to reflect a more profitable and stronger growth trajectory,” while maintaining his outperform rating.

"GM came out of the gates swinging, featuring top and bottom-line beats, with a raise in guidance as the company experienced strength on both its ICE and EV profitability efforts," Ives told investors.

While the shift to EVs and the current demand story are uncertain, the analyst said, "GM remains incredibly focused on delicately balancing the [internal combustion engine] ICE/EV production & profitability stories while increasing its original 2024 guidance."

GM shares rallied 4% on April 23 following the report and are trading near $45.

TheStreetPro's Bruce Kamich, a technical analyst who has been evaluating stocks for over 50 years, said that "perhaps we will have more sideways price action before renewed price strength."

"Buyers may need to be patient. Risk to $40," he added. Using point-and-figure charts, Kamich calculated a price target of $84 but said, "A trade at $47 is needed to refresh the uptrend."

Bank of America Securities, which has a buy rating and $75 price target on GM shares, said it believes the automaker's 2024 "may still be conservative."

GM continues to make meaningful investments in the Core to Future transition, including growing its EV business profitably and relaunching Cruise, GM's self-driving car company, the firm said.

BofA said the company's EV business should reach variable profit breakeven in the second half and achieve 2024 EV volumes of more than 200,000 with the Cadillac Lyriq, Chevrolet Blazer, GMC Hummer, and Chevrolet Silverado EVs.

Analyst impressed with EV progress

EV profitability improvement comes from higher production, lower battery input costs, and production tax credits.

"We are encouraged to see GM continuing to make progress in improving the cost position of its EV line-up while delivering strong results on its ICE portfolio," BofA said. "GM remains committed to Cruise and is being more deliberate with its investments in the business."

More Automotive:

Citi analysts raised their price target on General Motors to $96 from $95 and kept a buy rating on the shares.

The bank increased estimates after the company's first-quarter earnings beat, and GM remains the analyst's top pick.

GM offered encouraging second-quarter outlook commentary, suggesting further upside potential to the 2024 guide, and offered a confident tone around the electric vehicle outlook.

“Quarters like this continue to support the case that the now 5+yr running pushback on the stock has grown stale,” Citi contended.

RBC Capital raised its price target on GM to $58 from $56 and kept an outperform rating on the shares.

The company's first-quarter EBIT beat was "impressive," and its management remained bullish on its EV plans for 2024. The firm said several key launches will come in the second half of the year.

RBC added that GM investors should expect more buybacks in the future.

Meanwhile, Wells Fargo analysts rated GM underweight while raising their price target to $30 from $28 per share in a note entitled “Raising Bar Could Mean Bigger Fall.”

The firm said it expected the second-half EV ramp to be a large profit drag and expressed concern about slowing US share.

“Even with the recent decline in battery raw material costs, [Battery Electric Vehicles] BEV profitability is challenging, particularly with new pricing pressure,” Wells Fargo said. “However, US fuel economy regulations will likely force automakers to sell BEVs to meet targets.”

Overall, the analysts said, "We see limited near-term catalysts, as the normalization of new vehicle pricing and higher input costs likely offset expected volume increases."

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