Barron’s Weekly: General Motors is a technology stock, valuation will usher in an explosion

General Motors is still very much loved on Wall Street.

General Motors (GM), a century-old automaker, is gaining recognition for its technology reputation , and the company’s valuation is expected to rise in the coming months.

Wedbush analyst Dan Ives recently gave General Motors a “buy” rating with a target price of $85. General Motors closed at $58 on July 14.

Barron's Weekly: General Motors is a technology stock, valuation will usher in an explosion

Ives is not a traditional automotive analyst. He focuses on technology stocks such as Apple (Apple, AAPL) and Microsoft (Microsoft, MSFT), as well as new models such as Tesla (Tesla, TSLA) and Nikola, NKLA). Transportation technology stocks.

Ives’s inclusion of General Motors in its list of research and analysis companies shows that some analysts in the technology sector have begun to pay attention to General Motors’ investment in electric vehicles, battery production, and autonomous driving solutions.

“In the early days of Mary Barra (CEO of General Motors), General Motors encountered some obvious difficulties and obstacles,” Ives wrote. He pointed out that now “the market’s high attention to electric vehicles has allowed GM to focus on new energy and development strategies, and Wall Street has obviously begun to take notice of this.” He also said that Wall Street is adjusting its rating on GM.

The rating adjustment means that investors will begin to give GM a higher valuation because the company’s business stability and growth are expected to improve. General Motors remained profitable during the economic recession caused by the epidemic, which is a sign of business stability. In addition, the company has invested several one billion US dollars development of electric cars, trying to catch up with the market leader Tesla.

Based on the expected profit in 2022, GM’s price-earnings ratio is about 8 times. Ives expects the company’s earnings per share in 2022 to be $7.56, and the price-to-earnings ratio calculated on this basis is 11 times. In contrast, the S&P 500 index has a P/E ratio of about 20 times, and Tesla’s P/E ratio is about 100 times.

It is not uncommon for Tesla to be included in the research scope of tech sector analysts. In addition to Ives, there are New Street Research analyst Pierre Ferragu and Baird analyst Ben Kallo, both of whom are analysts in the non-traditional automotive sector. The three analysts rated Tesla as “buy”, and their target prices were $1,000, $900, and $736.

But Ives may be the first technology analyst to study General Motors stock. Some analysts who study General Motors also cover industrial stocks, but most cover only auto stocks.

General Motors is still very much favored on Wall Street . More than 90% of analysts give a “buy” rating, while the average ratio of S&P 500 index stocks to a “buy” rating is about 55%.

In 2021, Wall Street’s bullish view of General Motors has been confirmed: the company’s share price has risen about 35% so far this year, outperforming the S&P 500 and the Dow Jones Industrial Average.

Posted by:CoinYuppie,Reprinted with attribution to:
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