© Reuters.
On Wednesday, CFRA made a significant change to General Motors’ (NYSE:) stock, upgrading the rating from Sell to Hold and raising the stock price target to $76 from $60. This adjustment comes after General Motors’ recent financial performance and market analysis.
The CFRA analyst highlighted a positive shift in earnings per share (EPS) forecasts for the upcoming fiscal years, with the FY 25 EPS estimate increased to $4.76 from $4.60 and FY 24’s estimate raised to $4.70 from $4.56.
This adjustment is based on a multiple of 16 times the FY 25 EPS estimate, compared to the long-term average of 17 times. The upgrade is supported by General Motors’ FQ3 adjusted EPS of $1.17, which exceeded expectations by $0.12 and represented a 21% year-over-year growth.
Despite a 1% year-over-year decline in organic sales, the company saw an improvement in volumes from FQ2 with a less severe contraction of -2% compared to -4%. Pricing growth also slowed to +2% from +3% in the previous quarter.
A positive development was the recovery in the Pet segment, with volumes decreasing by 5% year-over-year compared to an 11% drop in FQ2. North America Retail volumes also showed improvement.
The analyst anticipates volumes to turn positive in the upcoming quarters as General Motors addresses challenges from the previous year, such as the reduction of SNAP benefits from March 2023 and improved product availability from competitors.
The company’s cost-saving measures have been strong and are expected to continue into FY 25. However, the return of incentive-based compensation in FY 25 may limit EPS growth.
While sales and margins are improving, CFRA maintains a cautious outlook for FY 25, suggesting it may not fully align with the company’s long-term growth strategy.
This article was generated with AI support and reviewed by an editor. For more information, refer to our T&C.
