Citi reiterated a Buy rating on top pick General Motors (NYSE:GM) and raised their 12-month price target on the stock to $89.00 (From $85.00) ahead of the company’s 2Q earnings release. Citi also opened a 30-day upside catalyst call as they continue to see plenty of upside from strong North American pricing and expect a solid 2Q beat.
Analysts wrote in a note, “If GM delivers another beat/raise with continued confidence in the 2025 trajectory, we think that an already stale “peak earnings” narrative could quickly lose momentum as GM’s resilience & growth become better appreciated—potentially leading to a rapid upward re-rating off the current ~5.8x consensus P/E. To that, one point that gets lost in the “peak earnings” debate is that, by our estimates, GM is arguably under-earning this year by an est. $4-5bln from the combination of Cruise losses, EV launch inefficiencies and ICE price gaps. The ICE price gaps should be addressed with new product launches (H2E & 2024E tailwinds). EV launch inefficiencies should lessen as Ultium ramps this year and next (with GM’s multiple nameplate strategy possibly coming to be viewed more favorably given recent concerns over rising U.S. EV inventory). The $4-5bln of course doesn’t contemplate actual revenue growth opportunities from EVs (coastal share gains), SW/AI defined cars or Cruise—all of which are expected to gain momentum in the coming 6-12 months. To that, we also continue to see value unlock opportunity if GM were to disclose Truck & Non-Truck financials separately (not necessarily ICE and EV separately, just Truck and Non-Truck).”
Citi has projected a revised adjusted EBIT estimate of $13.4 billion for 2023, surpassing GM's guidance range of $11-13B. Additionally, Citi anticipates an EPS of $7.75, while the consensus estimate stands at $6.95.
General Motors is expected to report 2Q earnings results on July 25th.
Shares of GM are up 0.95% in pre-market trading on Wednesday.