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What Are Analysts Recommending for Major Automakers after Declining Sales?

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Analyst consensus

Investors should pay attention to analysts’ recommendations because they can affect companies’ stock price movements. If a popular analyst changes his or her view, for example, it can cause a significant short-term movement in the stock price.

Let’s take a look at what Wall Street analysts are recommending for major automakers after the declining sales figures from August.

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Recommendations for automakers

As of August 7, 2016, according to the Wall Street analyst consensus compiled by Bloomberg, recommendations for mainstream automakers (XLY) are as follows:

  • General Motors (GM): 44% of analysts covering GM stock have given it “buy” while 52% of analysts recommended a “hold.” Only one analyst out of 25 gave GM a “sell” recommendation. GM’s consensus 12-month target price was $37, with a return potential of ~16% from its market price of $31.89.
  • Ford (F): Of the 24 analysts covering Ford stock, 54.2% have given it a “hold” recommendation, while 33.3% have given it a “buy” recommendation. Three analysts covering the company have given it a “sell” recommendation. Ford’s consensus 12-month target price was $13.72, with a return potential of 8% from the market price of $12.70.
  • Fiat Chrysler Automobiles (FCAU): About 46.4% of analysts have given it a “buy,” while 17.9% have given it a “hold” recommendation. Ten of the 28 analysts covering FCAU have recommended a “sell.” The company’s 12-month consensus target price was $8.30, with a return potential of 19.6% from the market price of $6.94.

Notably, the majority of the analysts covering Ferrari (RACE) are still positive about the company, primarily because any possible economic downturn won’t have a significant on Ferrari’s niche customer base—unlike other mainstream automakers.

Conclusion

In the past couple of months, many analysts have changed their recommendations from “buy” to “hold,” which reflects the concerns of declining auto sales. Any further sign of weakness in auto sales could highlight further risks and lead to more cautionary measures in the market.

Investors can read about automakers’ efforts in the development of autonomous vehicles in the Market Realist series Steering the Auto Industry: Investor’s Guide to Autonomous Vehicles. You can also check out the series The On-Demand Mobility Business Is Picking Up Speed: Here’s How to learn more about how automakers are competing in car-sharing business space. To learn about August US auto sales, read the series Do August Vehicle Sales Point to a Slowing US Economy?

For ongoing updates and analysis, keep checking in with Market Realist’s Autos page.

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