General Motors stock price target cut to $55 at RBC Capital

On Friday, RBC Capital Markets adjusted its outlook on General Motors (NYSE:GM), lowering the price target from $67.00 to $55.00 while maintaining an Outperform rating on the automaker's shares. The decision was based on revised expectations for the company's electric vehicle (EV) production volumes, now estimated at 300,000 units compared to the previous forecast of 600,000. According to InvestingPro data, GM currently trades at a P/E ratio of 6.64, suggesting an attractive valuation for this prominent automotive player with $187.4 billion in revenue.

The RBC Capital analyst stated that the valuation multiple for General Motors' core business remains unchanged at 5x price-to-earnings (P/E). However, the reduction in anticipated EV volumes prompted a reassessment of the sales multiple to 1x. This adjustment in sales projections and the subsequent reduction in expected EBIT (earnings before interest and taxes) led to the lowered price target. InvestingPro analysis indicates GM's overall financial health score is "GOOD," with particularly strong metrics in price momentum and relative value. Discover 8 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.

In light of potential tariff impacts, the analyst explored several scenarios. If General Motors were to absorb tariffs completely, it could see a drastic nearly 90% decrease in EBIT. The more likely outcome, according to the analyst, would involve passing the costs onto consumers, resulting in softer sales volumes. Under a situation where the U.S. SAAR (seasonally adjusted annual rate) drops by 2 million, the analyst anticipates a 21% reduction in GM's EBIT. This could lead to a contraction in valuation multiples, from 4x to 3x P/E, and a potential decrease in share value to approximately $28, which is around 40% lower than current levels.

Regarding the company's financial health, RBC Capital forecasts that General Motors will hold a net cash position of $14 billion by the end of 2025. This is a significant increase from the $4.4 billion net cash position GM reported during the pandemic in 2020. The firm's analysis reflects a cautious but still optimistic stance on General Motors' financial prospects amid evolving market conditions. With analyst targets ranging from $34 to $105 and the next earnings report scheduled for April 29, investors can access detailed financial analysis and Fair Value estimates through InvestingPro's comprehensive research reports, available for over 1,400 US stocks.

In other recent news, General Motors reported a strong first quarter in 2025, with U.S. deliveries increasing by 16.7% compared to the same period in 2024. The company delivered 693,363 vehicles, up from 594,233 in the previous year. Buick led the growth among GM's brands, with a 39.3% increase in sales, while Chevrolet's sales rose by 13.7%. In the electric vehicle segment, the Blazer EV, Silverado EV, and HUMMER EV models showed significant sales increases. On the other hand, Bernstein analysts downgraded General Motors' stock from Market Perform to Underperform, citing concerns over new vehicle tariffs and anticipated parts tariffs impacting financial performance. The analysts significantly reduced the price target to $35, reflecting a cautious outlook due to tariff pressures and weakening consumer sentiment. Additionally, General Motors announced temporary layoffs for about 200 workers at its Factory Zero plant in Detroit to align production with market dynamics. Meanwhile, the company is set to boost truck production at its Fort Wayne, Indiana, plant, adding between 225 and 250 jobs.

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