GM Stock (NYSE:GM)
The shift toward electric vehicles presents some difficulties for General Motors (NYSE:GM), which is currently trading at +2.01%. Investors should not let this deter them from purchasing shares despite the situation.
A Brief Explanation of the GM Upgrade:
On April 28th, 2023, several financial analysts, such as Goldman Sachs and Morgan Stanley, gave General Motors a rating of “outperform.” GM’s impressive earnings report for the first quarter of 2023 was the reason for the upgrade. The report demonstrated strong revenue growth, particularly in the electric vehicle (EV) market segment. In addition, the Chief Executive Officer of General Motors, Mary Barra, disclosed ambitious plans to invest heavily in electric vehicle technology, which further solidified the company’s commitment to both innovation and sustainability.
GM’s Plan for Future Expansion:
The electric vehicle market, the autonomous vehicle market, and the connected vehicle market are the focal points of GM’s growth strategy. With the release of the Chevrolet Bolt and the impending introduction of the Cadillac Lyriq, General Motors has made significant headway in the field of electric vehicles. A strong commitment to environmentally friendly transportation is signaled by the company’s announcement that it intends to invest $35 billion in electric vehicles and autonomous vehicle technology by the year 2025.
In the field of autonomous vehicles, General Motors has formed a partnership with Cruise, the industry’s foremost provider of self-driving technology, to jointly develop and test autonomous vehicles. Because of this partnership, GM has been able to maintain its lead over rivals in the competition to develop fully autonomous cars and trucks.
Last but not least, General Motors has entered the market for connected vehicles with the introduction of its OnStar technology, which offers real-time vehicle diagnostics, emergency services, and remote access features. Customers have demonstrated a strong preference for this technology, which helps GM differentiate itself from its rivals.
On Monday, Adam Jonas, an analyst at Morgan Stanley, raised his recommendation for GM stock (NYSE:GM) to Buy from Hold. His price target increased to $38 per share, up from $35 per share previously.
As a result of the bullish call, the share price of GM rose by 2.6% to $33.90 in the morning trading session. Both the S&P 500 (SPX +0.32%) and the Dow Jones Industrial Average (DJIA +0.32%) had moved upwards by 0.4% and 0.3%, respectively.
According to Jonas, the various concerns that surround the transition to electric vehicles, such as the gradual shrinking of the internal-combustion-engine business, the effects that it has on profitability, and the uncertainty over whether electric vehicles will ever be as profitable as traditional cars, are “sufficiently discounted” in GM’s stock. After reaching a high of more than $67 per share in January 2022, the price of the stock has since dropped by approximately 50 percent.
In addition to this, Jonas mentioned in a research note that he thinks it is positive that GM is making an effort to reduce costs. According to him, the sentiment of investors is negative, so there is room for improvement that could be beneficial to the shares.
GM is now one of the top five stocks that Jonas covers out of a total of 29. According to Jonas, the most optimistic scenario for the company’s stock involves electric vehicles (EVs) becoming as profitable as gasoline-powered automobiles in the years to come. In this scenario, the stock could reach as high as $60 per share.
The analyst has revised their rating in response to the company’s better-than-expected performance in the first quarter, which was reported on April 25. A profit of adjusted operating revenue of $3.8 billion was reported by GM. Wall Street anticipated an operating profit of $3.2 billion during this period.
As a result of the company’s strong performance in the first quarter, management increased its financial forecasts for the entire year. The company anticipates that its operating profit will be somewhere between $11 billion and $13 billion in 2023. The range was from $10.5 billion all the way up to $12.5 billion in January.
Following Jonas’ upward revision of his price target by $3, the average price target projected by analysts did not change by a significant amount. It is currently around $46 per share, which is higher than Jonas’ estimate of $38 per share.
The Buy-rating ratio underwent a shift. Approximately 56% of analysts who cover GM stock currently rate the company’s shares as Buy. About 58% of the stocks in the S&P 500 are rated as Buy by market analysts on average.
Around this time last year, more than eighty percent of the analysts covering GM stock recommended buying the company’s shares. However, enthusiasm for the shares has waned as a result of a number of factors, including rising interest rates, a weakening economy, and falling vehicle affordability.
Over the course of the previous year, GM share prices had fallen by approximately 13% prior to trading on Monday. During that time period, the S&P 500 index gained approximately 1%.
The recent upgrade that GM received is reflective of the company’s robust performance as well as its dedication to innovation. GM is in a strong position to seize a sizeable portion of the expanding automotive market as a result of its concentration on the development of electric, autonomous, and connected vehicles. GM’s investment in electric vehicle technology, in particular, will be essential to the company’s long-term success as the world continues to move toward more environmentally friendly modes of transportation. In general, it seems that General Motors has a prosperous future ahead of it, and both investors and customers have reason to anticipate the continued expansion and product development of the company.
Featured Image: Freepik @ auxin
