On Tuesday, Mizuho Securities reiterated its positive stance on shares of General Motors Company (NYSE:GM), maintaining an Outperform rating and a $54.00 price target for the automaker's stock. The endorsement follows a recent Analyst Day event at General Motors' Spring Hill, Tennessee facility, which is focused on electric vehicle (EV) battery and vehicle production.
During the event, GM confirmed its 2024 adjusted EBIT (earnings before interest and taxes) forecast of $14 billion, with an expected earnings per share (EPS) of $10, adjusted automotive free cash flow (FCF) of $10.5 billion, and capital expenditures of $11 billion. Moreover, the company unveiled plans to introduce a refreshed Chevrolet Bolt in late 2025 with an anticipated average selling price (ASP) of around $28,000.
General Motors also provided insights into its EV strategy, indicating that its EVs are on track to achieve variable margin positivity in the fourth quarter of 2024, which is ahead of market expectations. The company expects an EV EBIT improvement of $2-4 billion in 2025 and anticipates earning $2-4 thousand per EV in emissions credits. Furthermore, GM projects that EV profitability will be bolstered by a combination of scale and regulatory credits, as well as battery and cost improvements.
While slightly adjusting revenue estimates downward for 2025 and 2026 by 4% and 7% respectively, due to a somewhat weaker light vehicle production (LVP) outlook, Mizuho's analysis still places these figures above the consensus. The firm attributes this continued optimism to General Motors' sustained margin strength, a cautious and methodical approach to its EV rollout, and effective execution of its internal combustion engine (ICE (NYSE:ICE)) vehicle roadmap.
In other recent news, GM Defense, a subsidiary of General Motors, unveiled a hybrid tactical vehicle prototype, the "Next Gen." The vehicle, designed for stealth operations, offers features such as Silent Drive, Silent Watch, and exportable power for mission systems. In other developments, General Motors has entered into a long-term credit card partnership with Barclays (LON:BARC).
The collaboration aims to boost customer loyalty and potentially drive sales for GM. Barclays will be the sole issuer of GM's Rewards Mastercard (NYSE:MA) and Business Mastercard in the United States, starting next summer.
Evercore ISI and RBC (TSX:RY) Capital have maintained their Outperform ratings for GM, citing the automaker's robust earnings projection for 2024 and efforts to reduce electric vehicle losses. However, the company faces potential challenges with proposed tariffs on vehicles imported from Mexico. Despite these uncertainties, GM continues to demonstrate resilience and adaptability in evolving market conditions. These developments underscore GM's commitment to innovation and customer satisfaction.
InvestingPro Insights
General Motors' financial metrics and market performance align well with Mizuho's optimistic outlook. According to InvestingPro data, GM's P/E ratio stands at a low 5.49, with an even lower adjusted P/E of 4.86 for the last twelve months as of Q2 2024. This suggests the stock may be undervalued relative to its earnings potential, supporting Mizuho's Outperform rating.
The company's revenue growth of 7.2% in Q2 2024 and a robust EBITDA of $17.98 billion for the last twelve months indicate strong financial performance, which could contribute to achieving the projected $14 billion adjusted EBIT for 2024. Additionally, GM's high return over the last year, with a one-year price total return of 65.76%, reflects investor confidence in the company's strategy and execution.
InvestingPro Tips highlight that GM is trading at a low earnings multiple and has a low P/E ratio relative to near-term earnings growth. These factors, combined with the company's profitability over the last twelve months, suggest that GM's stock may have room for further appreciation, aligning with Mizuho's $54.00 price target.
For investors seeking a deeper understanding of GM's potential, InvestingPro offers additional tips and insights. Currently, there are 8 more InvestingPro Tips available for GM, providing a comprehensive analysis of the company's financial health and market position.
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