General Motors Well Positioned To Sustain Strong Margins - Analysts Raise Forecasts

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General Motors reported Q2 sales growth of 7.2% to $47.97 billion, surpassing analyst expectations with adjusted EPS of $3.06.
Analysts from Goldman Sachs and BofA Securities reaffirm Buy ratings on GM, raising price targets and EPS estimates for FY24 and FY25.
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Goldman Sachs analyst Mark Delaney reiterated the Buy rating on General Motors Company GM, with a price forecast of $53.

General Motors reported second-quarter sales growth of 7.2%, totaling $47.97 billion. Adjusted EPS of $3.06 beat analyst estimates of $2.72.

According to the analyst, the report demonstrated that General Motors is well positioned to sustain strong margins in the second half of the year and 2025 given the company’s product mix/lineup and below industry average incentives (aided by its relatively low finished vehicle inventory levels).

Moreover, the analyst highlights that the company continues to focus on cost and said it remains on track to achieve its net $2 billion cost reduction plan by the end of the year (of which ~$1.4 billion of cost reductions have been realized).

Delaney adds that the company will look to find incremental efficiencies in the business to mitigate somewhat more difficult industry pricing trends in 2H24/25.

The analyst raised FY24 revenue estimate to $181.238 billion from $175.379 billion. Delaney now projects FY24 EPS of $10.30, higher than the prior view of $9.85.

BofA Securities analyst John Murphy reiterated the Buy rating on the stock, with a price forecast of $85.

While the company’s stock declined as 2024 guidance fell short of investor expectations, the analyst highlighted GM’s new guidance remains conservative even with some incremental headwinds.

According to the analyst, GM is a leader in the Core to Future transition, with potential growth beyond 2024.

More commentary on the potential business plan will be provided at its Investor Day this fall, Murphy adds.

Per the analyst, pricing is now expected to be stronger in the second half than previously anticipated (flat in third quarter, down 1.5% in fourth quarter).

The analyst raised FY24 EPS to $9.90 from $9.78 and FY25 EPS to $10.60 from $10.45.

Price Action: GM shares are trading lower by 0.06% to $46.35 at last check Wednesday.

Photo by Jonathan Weiss on Shutterstock

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