Analyst Joseph Spak from UBS maintained a Buy rating on General Motors and keeping the price target at $81.00.
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Joseph Spak has given his Buy rating due to a combination of factors, primarily centered around the valuation and market expectations for General Motors. Utilizing the UBS HOLT framework, Spak identifies that the market is not currently pricing in any margin recovery for GM and anticipates a decline in the cash flow return on investment. However, even with consensus estimates, the HOLT discounted cash flow (DCF) model suggests there is potential for upside from current levels.
Spak is more optimistic than the consensus, projecting a warranted price of $83 per share, which represents a 49% increase from current levels. This optimism is based on the belief that GM’s North American margins can return to the 8-10% range over the next two years, compared to the consensus expectation of 6-6.5%. Additionally, the HOLT DCF model, using current consensus estimates, indicates a warranted price of $64, which already implies a 16% upside. Spak’s valuation approach, using a 6x price-to-earnings ratio, aligns with historical ranges and supports the Buy rating.
In another report released yesterday, Bank of America Securities also maintained a Buy rating on the stock with a $61.00 price target.
Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of GM in relation to earlier this year.