On Wednesday, Mizuho has increased its price target for General Motors (NYSE:GM) shares to $52.00, up from the previous target of $48.00, while keeping a Buy rating on the stock. This adjustment follows General Motors' report of robust first-quarter revenue and earnings per share (EPS), which exceeded market expectations.
General Motors announced a significant first-quarter revenue of $43.0 billion and an EPS of $2.62, surpassing the consensus estimates of $42.1 billion and $2.12, respectively. Despite a quarterly dip, wholesale vehicle deliveries remained strong at 895,000 units, only a 5% decrease compared to the last quarter, which is notably less than the industry's overall 12% decline.
Mizuho highlighted several key points from General Motors' performance and outlook. The automaker anticipates a 2-2.5% year-over-year decrease in pricing for 2024. Moreover, GM's internal combustion engine (ICE) SUVs and pickup trucks are expected to gain market share in 2024.
The company also projects an increase in electric vehicle (EV) production, with positive variable profit anticipated in the second half of 2024. Moreover, the losses from GM's autonomous vehicle subsidiary, Cruise, are projected to narrow to around $1.7 billion annually, a significant improvement from previous figures exceeding $3 billion.
The firm's optimism about General Motors is rooted in the automaker's dominant position in the ICE SUV and pickup truck markets, along with a disciplined plan for rolling out EVs. The improved price target reflects confidence in GM's ability to manage costs effectively and maintain competitive pricing, which are seen as positive drivers for the company's future performance.
InvestingPro Insights
Following Mizuho's revised price target for General Motors, current data from InvestingPro underscores the company's financial robustness and market position. General Motors boasts a market capitalization of $52.06 billion, with an attractive P/E ratio of 5.32, indicating that the stock may be undervalued given its earnings potential. In addition, the company's revenue has grown by 8.79% over the last twelve months as of Q1 2024, signaling strong business performance.
InvestingPro Tips suggest that General Motors' management has been strategically repurchasing shares, which can be a sign of confidence in the company's value. Moreover, analysts have revised their earnings expectations upwards for the upcoming period, reflecting a positive outlook for the automaker's financial future. With a strong free cash flow yield implied by its valuation, GM appears to be in a solid position to sustain its growth and shareholder returns.
For readers looking to delve deeper into General Motors' investment potential, InvestingPro offers additional insights and metrics. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to even more InvestingPro Tips—there are 12 more tips listed for GM on InvestingPro, covering aspects from profitability predictions to stock price volatility and industry standing.
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