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Why Analysts Prefer GM over Ford after 2017 US Sales Data

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Ratings on Ford and GM

According to data compiled by Thomson Reuters, only 17% of the analysts covering Ford stock (F) gave it “buy” ratings. In comparison, 46% of analysts covering GM stock gave it “buy” recommendations. These consensus ratings are based on the opinions of 24 analysts covering both of these auto giants as of January 9, 2018.

75% and 46% of these analysts recommended a “hold” for Ford and GM, respectively.

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Next-12-month target prices

As of January 9, Wall Street analysts’ 12-month consensus target price for Ford Motor was $12.85, about 1.7% lower than its market price of $13.08. Analysts’ consensus target price for GM stock was $47.22, which was ~7.2% higher than its market price of $44.05.

In the last few months, a higher percentage of analysts have turned in favor of GM and have recommended a “buy” on its stock. In the last six months, Ford stock has risen by 19.1%, while GM stock has yielded much higher positive returns of about 28.5%. During this period, other auto companies such as Fiat Chrysler (FCAU) and Toyota (TM) have risen 98.1% and 25.1%, respectively.

Is GM a better bet?

Overall, a higher percentage of Wall Street analysts are optimistic on GM stock at the moment compared to Ford Motor. A consistent improvement in GM’s profit margins and its continued focus on US retail market share (IYK) could be two primary reasons why more analysts are confident about GM. GM is far ahead of Ford, Fiat Chrysler, and Toyota in terms of US retail market share.

Read on to the next part where we’ll look at how US automakers’ valuation multiples are trending after their December US sales reports.

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