General Motors Earnings Could Beat Q2 Estimates; Target Price $74

General Motors, an American multinational corporation that was the world’s largest motor-vehicle manufacturer in the 20th century, is expected to report earnings of $2.23 per share in the second quarter, representing a year-over-year increase of over 540% from a loss of $0.50 per share a year ago.

The Detroit, Michigan-based auto manufacturer would also post revenue growth of about 73% to $29 billion. According to ZACKS Research, the company has beaten earnings per share (EPS) estimates in all of the last four quarters.

General Motors stock closed 1.49% higher at $57.88 on Tuesday. The shares have gained 39% so far this year.

Analyst Comments

“We expect General Motors (GM) to beat the consensus estimates for revenues but fall slightly short on earnings. The company has reported better than expected earnings figures in each of the last four quarters while revenue was better than market estimates in two of the last four quarters,” noted analysts at Trefis.

“In the past year and a half, the company was affected due to various lockdowns across the world due to the pandemic. The Automotive sector is currently also affected by the global shortage of semiconductor chips which is affecting production across the world. Our forecast indicates that GM’s valuation is $70 per share, which is 26% above the current market price of $55.”

General Motors Stock Price Forecast

Fifteen analysts who offered stock ratings for General Motors in the last three months forecast the average price in 12 months of $74.73 with a high forecast of $90.00 and a low forecast of $60.00.

The average price target represents a 29.11% change from the last price of $57.88. From those 15 analysts, 14 rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $80 with a high of $120 under a bull scenario and $32 under the worst-case scenario. The firm gave an “Overweight” rating to the motor-vehicle manufacturer’s stock.

“We are OW based on GM’s diversified portfolio, with multiple ways for General Motors (GM) to enhance shareholder value, through: EVs, ICE and Autonomy. GM also has leading North American margins, generates strong cash flow, and has a robust balance sheet,” noted Adam Jonas, equity analyst at Morgan Stanley.

“We believe that the market is underestimating the SOTP of the GM enterprise via: 1) Legacy ICE, 2) GM EV, 3) GM’s Ultium Battery business, 4) China JVs, 5) GM Finco, 6) GM Cruise, 7) hidden franchise value in brands such as Corvette and 8) GM Connected Services. GM management has a proven track record to allocate capital away from structurally challenged areas towards re-positioning the business model.”

Several other analysts have also updated their stock outlook. RBC raised the stock price forecast to $77 from $72. BofA lifted the price objective to $90 from $80. UBS upped the target price to $79 from $75.