After a bullish remark from Wedbush analyst Dan Ives, who claimed the automobile company is now a “disruptive technology play” given Chief Executive Mary Barra’s “laser focus” on electric vehicles, shares of General Motors Co. rose Friday, putting them on course to end a five-session losing skid. Ives launched coverage of GM with an outperform rating and a $85 stock price target, implying a 52 percent rise from Thursday’s $56.06 closing price. With a $86 price target, Ives is the second most positive of the 23 Wall Street analysts polled by FactSet, trailing only Wolfe Research’s Rod Lache.
After losing 5.3 percent in the previous five trading sessions, the stock GM, -0.94 percent climbed 3.6 percent in premarket trade on Friday. It hit a seven-week low on Thursday.
Twenty-three of the twenty-three analysts that cover GM are positive.
FactSet
“2021 acts as an inflection point” for GM, as it entirely shifts its attention toward an electric future, according to Ives, with at least 20 new EV models coming out in the next two years and 30 EV models coming out in the following three years. In a note to clients, Ives wrote, “GM continues to be a re-rating story as the Street treats the Detroit automaker not as a traditional auto company trading on book value, but as a broader disruptive technology play that can start to trade at multiples similar to Tesla and other pure-play electric-vehicle companies as GM executes on its vision.” GM’s stock has gained 34.6 percent this year and 139.4 percent in the past 12 months through Thursday, outperforming Tesla Inc.’s shares TSLA, +1.27 percent, which has dropped 7.5 percent this year but gained 134.1 percent in the previous year. In comparison, the S&P 500 index SPX, -0.86 percent is up 15% in 2021 and up 37.1 percent in the last year.
MarketWatch, FactSet
GM is also in a “great position” to take advantage of a burgeoning $5 trillion battery industry, according to Ives, because the Ultium Platform is generating “game-changing” battery technology. “By exploiting this technology, traditional car [manufacturers] will be able to eat market share in all parts of the industry against pure-play EVs,” Ives wrote. That isn’t all, though. As autonomous- and assisted-driving capabilities and battery technology develop, Ives believes GM’s software and services business tied to the EV shift represents a “potential gold mine” worth $20 billion to $30 billion over the next five to seven years./n
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