GM is a technological action and its valuation could skyrocket. Here’s why.

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General Motors Battery Research and Development Laboratory.

Steve Fecht for General Motors

Century-old car manufacturer

General Motors

gets some recognition for its technological credit. This could help its valuation multiple in the coming months.

Wedbush analyst Dan Ives resumed coverage of GM stock (ticker: GM) on Thursday night with a buy rating and a price target of $ 85. GM stock closed at $ 56.06 and is up about 2% in after-hours trading.

Ives is not a traditional auto analyst. Its coverage includes traditional technology stocks such as

Apple

(AAPL) and

Microsoft

(MSFT), and includes new transportation technology stocks such as

You’re here

(TSLA) and

Nicolas

(NKLA).

GM’s inclusion in its list shows that some technology analysts are taking note of GM’s investments in the production of electric vehicles and batteries as well as in autonomous driving solutions.

“The first part of [CEO
Mary Barra
‘s] the tenure has had clear dips and major slowdowns, ”Ives wrote. Now, “the focus on laser electric vehicles has given GM new energy and a new strategic direction that the streets have clearly started to take into account,” he noted, adding that GM is now a “reevaluation story”.

The revaluation means that investors will start paying a higher valuation multiple on profits due to the perceived stability and growth of the company. GM was successful in making money during the Covid-19 recession. It is a sign of stability. It is also pouring billions into electric vehicles in an attempt to catch up with electric vehicle leader Tesla.

GM shares are trading at about eight times their estimated 2022 earnings. Ives’ target price is roughly 11 times their 2022 earnings estimate of $ 7.56 per share. By comparison, the

S&P 500

is trading around 20 times, while Tesla shares are trading around 100 times estimated 2022 earnings.

It’s not uncommon for technical analysts to cover Tesla. New Street Research analyst Pierre Ferragu and Baird analyst Ben Kallo are examples of non-traditional auto analysts, with Ives covering Tesla. All three are evaluating the Tesla stock to buy. Ives, Ferragu and Kallo’s price targets are $ 1,000, $ 900 and $ 736, respectively.

But Ives may be the first technical analyst to cover GM stocks. Some GM analysts also cover industrials, but most only oversee the auto sector.

GM continues to be a very popular stock on Wall Street. Over 90% of analysts covering the company’s rate share a purchase. The average purchase ratio of S&P 500 stocks is around 55%.

This has been a good call for the streets in 2021. Stocks are up about 35% year-to-date, better than the comparable gains of the S&P 500 and

Dow Jones Industrial Average.

Write to Al Root at [email protected]


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