4 General Motors Analysts Confirm Strong EV Strategy: 'Capital Allocation Will Remain A Tailwind'

General Motors Co GM exceeded earnings expectations as it reported first-quarter (Q1) earnings on Tuesday.

The company achieved a 7.6% year-on-year increase in quarterly sales, reaching $43.01 billion, surpassing the analyst consensus of $41.88 billion. Additionally, adjusted EPS stood at $2.62, outperforming the consensus estimate of $2.14.

Despite these gains, GM’s market share dipped slightly to 8.1% overall, with decreases noted in both the U.S. and China compared to the previous year. The stock closed lower on Tuesday but has been trading in the green on Wednesday.

Here’s what analysts have said about GM’s first-quarter (Q1) earnings report:

• Goldman Sachs analyst Mark Delaney, CFA has a Buy rating on GM stock with a 12-month price target of $52. The price target implies an upside of 15.3%.
• Piper Sandler analyst Alexander Potter has Neutral rating on the stock with a price target of $45 a share.
• BofA Securities analyst John Murphy, CFA has a Buy rating on the stock with a price objective of $75 – implying an upside of 66.3%.
• Mizuho Securities analyst Vijay Rakesh maintained Buy rating on the stock while raising price target from $48 to $52.

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Goldman Sachs: Delaney highlighted GM’s robust margins and free cash flow, alongside progress in electric vehicles (EVs) and overall profitability. “Margins can remain resilient, driven both by cost/efficiencies and relatively firm pricing,” he said.

Delaney views EV profitability progress positively, noting relative demand strength for GM’s EVs. He anticipates investor focus on GM’s ability to achieve profitability targets in EVs, particularly in 2025.

“We believe capital allocation will remain a tailwind,” Delaney noted.

Piper Sandler: Despite GM’s impressive quarter and a 5% post-earnings stock surge, there’s caution due to potential margin decline in the second half of 2024 from rising EV sales.

Potter notes “highly uncertain implications of rising EV sales in 2H24 and beyond”, impacting extrapolation from strong Q1 results. Nevertheless, upward estimate revisions and increased buybacks support a higher price target of $45, up from $44.

BofA Securities: According to Murphy, GM remains focused on and “is continuing to make meaningful investments in the Core-to-Future transition.” Its strong execution in the Core business should enable investments in EVs and AVs.

Continued development in mobility services may unlock value over time. GM focuses on growing its EV business profitably, aiming for breakeven in the second half of 2024 and 200k+ EV volumes by 2024. The company remains committed to Cruise and will provide further updates at the upcoming Investor Day.

Mizuho Securities: Rakesh sees “GM well positioned with its ICE leadership position in the SUV/pick-up truck markets, and more disciplined EV rollout plan.”

The company’s premium vehicle lineup, including full-size pickups and SUVs, maintained dominance in the US market, with full-size SUV market share increasing by 300 basis points to 66%.
EV sales surged by 74% quarter-on-quarter, driven by Ultium-based models like the Cadillac LYRIQ and Chevy Silverado EV work truck, aligning with the company’s expectation of significant production growth in 2024.

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