On Thursday, JPMorgan updated its financial outlook for General Motors (NYSE:GM), reducing the price target from $64 to $53 while maintaining an Overweight rating. The adjustment comes as analysts at JPMorgan, led by Ryan Brinkman, project significant tariff costs that could impact the automaker’s profits. According to their estimates, General Motors could face up to $14 billion in tariffs, potentially absorbing all of its global profits. InvestingPro data shows GM currently trades at a P/E ratio of 7.86, suggesting an attractive valuation despite these challenges. The company maintains a "GOOD" overall Financial Health Score of 2.87, indicating fundamental strength beneath the tariff concerns.
General Motors’ total revenue reached $187.44 billion in the last twelve months, with North American revenue at approximately $157 billion and an estimated $140 billion related to new vehicle sales in the United States. JPMorgan’s analysis suggests that GM imports around $56 billion worth of vehicles annually from Mexico and Canada, which could result in a tariff bill of about $10 billion for finished vehicles. Additionally, the tariffs on imported parts that GM uses in U.S.-built vehicles could add another $4 billion, totaling an estimated $14 billion in tariffs before any coping mechanisms are applied. This amount aligns closely with the $12.5 to $14.5 billion global EBIT GM projects for 2025, not accounting for the potential impact of new tariffs or reduced electric vehicle (EV) subsidies. The company’s strong free cash flow yield of 18% suggests significant financial flexibility to navigate these challenges.
In comparison, Ford’s estimated tariff costs are lower, at around $6 billion, which is approximately 75% of its projected $7.75 billion global EBIT for 2025. Ford sells a smaller percentage of vehicles in the U.S. that are imported from Mexico and Canada, around 10% of its total U.S. sales. The estimated tariff on Ford’s finished vehicle imports is approximately $2 billion, with an additional $4 billion for imported parts used in U.S. assembly, totaling the $6 billion tariff expense.
JPMorgan’s analysis indicates a greater potential tariff impact on General Motors compared to Ford. The report details that GM’s estimated normalized EBIT could be entirely offset by the projected tariff costs, whereas Ford’s tariff burden would be a lower percentage of its normalized EBIT. The analysts’ findings are based on current import figures and the potential effects of a 25% tariff on these imports, as well as the companies’ guidance for future earnings before interest and taxes (EBIT). InvestingPro analysis reveals additional insights about GM’s financial position, with analyst price targets ranging from $37 to $105, reflecting diverse views on the company’s ability to manage these challenges. Get access to 8 more exclusive ProTips and a comprehensive Pro Research Report covering GM’s complete financial picture on InvestingPro.
In other recent news, General Motors (GM) is nearing a significant agreement with Hyundai (OTC:HYMTF) to share electric commercial vans and possibly receive pickup trucks in return. This potential collaboration may also involve joint efforts in developing computing chips and next-generation batteries. General Motors has also formed a partnership with NVIDIA (NASDAQ:NVDA) to integrate AI-driven technology into its vehicles and manufacturing processes, aiming to enhance factory operations and vehicle safety features. Additionally, GM has teamed up with YMCA of the USA to boost STEM education in rural communities, addressing educational disparities and preparing students for future workforce opportunities.
Piper Sandler has raised its price target for General Motors to $48, maintaining a Neutral rating due to investor skepticism about future earnings. The firm acknowledges GM’s solid performance but notes historical patterns of post-earnings declines in the auto industry. In political developments, GM CEO Mary Barra recently met with President Trump to discuss investment plans amidst an ongoing tariff dispute. Trump mentioned GM’s interest in investing $60 billion, although details about the timeline remain unspecified. These developments highlight GM’s strategic moves in technology, education, and international trade discussions.
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