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General Motors analysts mostly encouraged after 'critical' Investor Day

Stock Markets Nov 18, 2022 08:50AM ET
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© Reuters. General Motors (GM) analysts mostly encouraged after 'critical' Investor Day
 
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By Senad Karaahmetovic

General Motors (NYSE:GM) held a much anticipated Investor Day yesterday, where the company updated its guidance and doubled down on its ambitious electric vehicle (EV) plans.

Chief Executive Mary Barra said she expects the company's EV portfolio will be profitable by 2025. She added that GM is ramping up EV production in China and aiming to produce 2 million EVs globally by 2025 and generate over $50 billion from this segment in 2025.

Revenues are expected to grow at a 12% compound annual growth rate (CAGR), hitting $225B+ through 2025.

"We expect our EV portfolio to be profitable by 2025 including GHG benefits and revenue from software and after sales. This is before the benefits of the new clean energy tax credits. When we factor that in, we believe by 2025, we will be expecting a portfolio that has got the same margin profile as our ICE portfolio, and that's by 2025."

"There is clearly a lot coming between now and 2025, including next-generation ICE products, and our dealers will be ready," she added.

The company narrowed its 2022 EPS range so it now expects the adjusted EPS at $6.75-7.25 compared to the prior $6.50-7.50. Analysts were expecting an FY EPS of $7.16.

GM also said it expects to produce 400,000 EVs in North America from 2022 through the first half of 2024, less than previously expected.

Here's what 5 GM analysts had to say about the event:

Goldman Sachs analysts: "We believe that the event was a positive, with GM articulating a path to EV profitability in 2025 even before IRA credits, reiterating its 2030 targets (e.g. a 12-14% EBIT margin), and guiding for a solid North America EBIT margin through 2025 (of 8-10%) even with the EV transition and potential price-mix normalization. We maintain our Buy rating."

Deutsche Bank analysts: "Overall, we view GM’s message as quite bullish… Nearer term, we believe the company's earnings and margin trajectory will also largely depend on the operating and macro environment over the next few years, with any longer/deeper recession likely to disrupt its trajectory toward 2025."

Wedbush analysts: "Heading into a key 2023-2025 stage for GM, the Street will be laser focused on EV updates around the core vision that Barra & Co. are driving. Tax credits will only accelerate these core metrics. We walk away from the analyst day feeling incrementally confident that GM is on the right path towards accelerating its EV vision into the coming years with 2025 the major inflection point year."

Wells Fargo analysts: "Even with IRA help (GM est. of $3.5-5.5K), we expect EVs are lower profit than ICE, particularly on pickups. GM's margin targets look overly optimistic in our view, and therefore we reiterate our Underweight rating."

Bank of America analysts: "In our view, the event was constructive, and further illustrated GM as an industry leader in what we characterize as the Core to Future transition. We maintain our Buy rating."

As of 08:40 EST (13:40 GMT), GM stock is up 1.2% in pre-open.

General Motors analysts mostly encouraged after 'critical' Investor Day
 

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George Pletea
George Pletea Nov 18, 2022 9:00AM ET
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screen smoke (aka LT view) to fog the ST problems. Unless they have a crystal ball seeing through 2030 seems too ambitious
 
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