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General Motors Stock: Most Analysts Recommend a ‘Buy’

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Feb. 4 2019, Updated 3:40 p.m. ET

General Motors’ fourth-quarter earnings

In the previous part of this series, we discussed what analysts expect from General Motors’ (GM) third-quarter earnings, which reflected minor weakness. Weakness in General Motors’ vehicle sales in the second half of 2018 will likely hurt its fiscal 2018 earnings. Other than the earnings estimates, investors should also be aware of analysts’ ratings. The ratings might impact the company’s stock price action.

Now, we’ll discuss analysts’ recommendations for General Motors before its fourth-quarter earnings.

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Most analysts suggest a “buy”

According to the latest data compiled by Reuters, nearly 67% of the analysts covering General Motors stock recommended a “buy,” 28% recommended a “hold,” and 5% recommended a “sell.”

As of February 1, analysts’ 12-month consensus target price for General Motors stock was $45.45, which was ~17.2% higher than its market price of $38.78. About six months ago, analysts’ consensus target price for the company was higher at $49.44.

Despite General Motors’ efforts to protect its profitability by focusing on retail sales, its falling overall sales, which we discussed in the previous part, could take a toll on its near-term growth.

General Motors has been actively investing and staying ahead of the competition in the autonomous and electric vehicle segments. While these investments could help General Motors expand its revenue sources in the medium to long term, generating profits in these segments is still a challenge.

Peers’ ratings

As of February 1, analysts’ ratings for General Motors’ peers (IYK) with their 12-month return potential were as follows:

  • Ford (F): Only 24% of the analysts suggested a “buy.” The target price reflected 6.9% upside potential from its market price.
  • Fiat Chrysler (FCAU): 43% of the analysts gave it a “buy.” The consensus target price reflected 41.8% upside potential.
  • Toyota (TM): ~73% of the analysts gave it a “buy” with 23.3% upside potential.

Next, we’ll discuss what analysts expect for General Motors’ fourth-quarter revenues.

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