GM stock is a buy, Citi says

Citi analyst Itay Michaeli likes what he sees from General Motors (General Motors Stock Quote, Chart, News, Analysts, Financials NYSE:GM)

As reported by The Globe and Mail, Michaeli March 18 reiterated his “Buy” rating an price target of $95.00 on GM. Because the stock closed March 15 at 40.69, the analyst’s target implied a return of 133.5 per cent at the time of publication.

Michaeli says headwinds GM has faced of late may be subsiding.

“Fresh datapoints support this stance: (1) March U.S. retail demand appears off to a decent start with volume running ahead of our expectation (more than 16 million SAAR) though pricing somewhat below—netting to OEM retail revenue running 6 per cent ahead of our estimate. (2) S&P Global raised Q1 NA production forecasts for GM & Ford—including for Pickup Trucks. Ford Pro looks particularly well-positioned into Q1 on strong Super Duty production. Also notable is that S&P slightly raised 2024 GM Ultium EV production. (3) GM’s early-March U.S. pricing continues to look encouraging. (4) On the auto cycle, fresh data suggests the 2023 scrap rate fell to 4.2 per cent from 4.3 per cent in 2022, even as miles-driven-per-vehicle rose. This suggests room for scrap to move higher, which if combined with further vehicle density gains (as our 2023 survey suggested), should drive continued auto demand resilience. Lastly, the Cox/Moody’s auto affordability index declined to its best level since July 2021. Stepping back, while numerous headwinds still exist (softer pricing, inventory), recent data paints a more resilient picture vs. what GM/F are pricing in,” the analyst wrote.