30 Aug

Analysts’ Targets on GM Stock Have Fallen after Q2 2018 Earnings

WRITTEN BY Jitendra Parashar

Auto stocks

In the previous part, we looked at analysts’ views of Ford Motor Company (F). The company’s F-Series trucks have been the best-selling trucks in the United States for over four decades. Despite its increasing focus on electric vehicles (IYK) and autonomous vehicles, Ford stock has underperformed its peers in 2018 so far.

Year-to-date, General Motors (GM), Fiat Chrysler (FCAU), and Toyota (TM) saw their stock prices rise ~17.7%, 96.4%, and 8.5%, respectively. In 2018 so far, Ford has lost 19.1% against the 8.3% increase seen in the S&P 500 Index through August 27.

Analysts’ Targets on GM Stock Have Fallen after Q2 2018 Earnings

Wall Street analysts on GM stock

In the last three months, several analysts have turned positive on GM stock. According to the latest consensus data from Reuters, 57.0% of analysts covering GM stock gave it “buy” recommendations. Another 38.0% of analysts gave General Motors “hold” recommendations. The remaining 5.0% of analysts covering the stock expect it to underperform and suggested a “sell.” On August 27, 21 analysts covered the company.

GM’s 12-month consensus target price was $46.53, reflecting an upside potential of 23.4% from its market price of $37.69. About a month ago, the consensus target price for GM was much higher at $49.44. Its all-time high is $46.76 since its listing on the NYSE in 2010.

Key fundamentals

GM’s second-quarter adjusted EPS stood at $1.81, down ~4.0% YoY. It reported a 0.6% YoY decline in its second-quarter revenues to $36.8 billion. GM’s second-quarter EBIT (earnings before interest and tax) margin also contracted to 8.7% compared to 10.0% in the second quarter of 2017.

In the first half of the year, GM’s US sales were positive. Its total US sales rose 3.8% and 4.6% YoY in the first and second quarters, respectively.

Despite positive sales data, America’s ongoing trade tensions with China could be hurting GM stock. In 2017, General Motors sold more vehicle units in China (including sales from its joint ventures) than it sold in its home market.

Continue to the next part to learn about analysts’ latest views on Fiat Chrysler stock.

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