Jefferies analyst Philippe Houchois upgraded the firm’s rating on General Motors and Ford to ‘Buy’ from ‘Hold,’ according to two research notes first obtained by PriceTarget.
The analyst set price targets of $99 and $17.50, respectively — representing an upside potential of about 20% based on Friday’s closing price.
Shares of both Detroit automakers were trading between 2 to 3% higher in Monday’s first hour of trading.
GM reported second-quarter earnings last week, beating estimates and raising full-year guidance for the second time this year, while Ford is scheduled to release its own results after the bell on Tuesday.
The double upgrade marks a notable turn for Houchois, who had held ‘Hold’ ratings on both stocks for an extended period.
Jefferies last upgraded Ford to ‘Hold‘ from ‘Underperform‘ in October 2025, while GM had carried a ‘Hold’ rating from the firm for over a year despite successive price target increases.
According to Houchois, the historic valuation gap between Ford and GM has normalized, as GM‘s Q2 performance — including its earnings beat and guidance raise — “creates a more supportive environment for Ford.”
GM’s Upgrade
General Motors posted adjusted diluted EPS (earnings per share) of $3.57 for the second quarter, above the consensus estimate of roughly $3.20.
Revenue came in at $48 billion, with adjusted EBIT (earnings before interest and taxes) growing 29.8% year over year to $3.9 billion, pushing the adjusted EBIT margin to 8.2% from 6.4% a year earlier.
The results led GM to raised its full-year adjusted EBIT guidance to $14 billion to $16 billion, from a prior $13.5 billion to $15.5 billion, and to lift adjusted EPS guidance to $12 to $14.
Houchois raised his price target to $99 from $90 — implying approximately 20% upside from Friday’s close of $82.64.
The analyst wrote that GM‘s investment case “is well understood but continues to surprise, including strategic options for cash use beyond buybacks.”
At roughly five times Jefferies’ 2027 earnings estimate, a re-rating of the stock’s valuation multiple would provide additional upside, but is “not needed to reach our $99 PT,” the analyst added.
Pricing discipline anchored much of Jefferies’ thesis.
The analyst noted GM raised its full-year pricing assumption to positive 0.5%, the high end of prior indications, “even as it implies some weakening in [the second half] to ensure low inventories ahead of [year-end] truck launches.”
GM‘s US full-size pickup market share stood at more than 42% through the first half — more than 10 percentage points above its closest competitor, according to the company’s Q2 shareholder letter.
Warranty Gains and New Trucks
Warranty cost reductions featured prominently in the note.
Houchois wrote that GM “achieved meaningful progress on warranty ($500m in H1), with more expected in Q3 and to a lesser extent Q4.”
CFO Paul Jacobson has previously suggested matching best-in-class peers could release $2 billion to $4 billion in cost over time — a figure Houchois reiterated.
During the Q2 earnings call, Jacobson said GM raised its year-over-year warranty tailwind expectation from $1 billion to $1.5 billion.
Houchois acknowledged that GM‘s adjusted EBIT improvement this year relies in part on external tailwinds.
He estimated US regulatory benefits linked to EVs and CO2 compliance contributed approximately $1.9 billion at the midpoint.
By 2027, earnings growth should be more organically supported by the product cycle, operational efficiency and diversification, the analyst wrote.
New Chevrolet Silverado and GMC Sierra trucks sit at the centre of the 2027 outlook.
Houchois expects both to launch in late 2026, in a context of low dealer inventory and stable market share.
GM invested C$63 million ($43.9 million) at Oshawa Assembly earlier this year to prepare for the next-generation pickups, and Jacobson has flagged constrained truck supply in the first half.
Updated content — including SuperCruise, which GM said reached record deliveries in Q2 — and a refreshed engine mix should lift revenue per unit, Houchois argued.
Digital Services
Jefferies factored in higher contributions from GM‘s connected vehicle services, noting over $6 billion in deferred revenue and one million new subscriptions expected this year.
Houchois expressed some caution, writing that the firm continues to “wonder how long US consumers will pay for these given resistance in other parts of the world.”
On cash generation, Jefferies estimates GM can produce free cash flow in excess of $10 billion once the majority of its EV and reshoring repositioning is completed — a scenario the analyst expects by next year.
At current levels, the implied free cash flow yield stands at 14%, which Houchois said can fund additional buybacks and diversification.
GM announced a $6 billion repurchase authorization alongside its Q4 2025 results in January.
Ford’s Case
Houchois raised Ford‘s price target to $17.50 from $14.50.
The target implies roughly 22% upside from Friday’s close of $14.37.
The upgrade arrived two days before the company reports second-quarter results.
Jefferies’ rating change marks the second upgrade Houchois has issued on Ford in under a year.
Before the October 2025 move to ‘Hold’, the firm had carried an ‘Underperform‘ rating with a $9 target as recently as August 2025, citing tariff exposure and ongoing EV losses.
Houchois wrote that “there is always scope for surprise either way at Ford,” but said he sees the second quarter “as a low point for volume with post-Novelis production set to normalize up.”
Novelis, Ford‘s primary aluminium sheet supplier, restarted its hot mill at Oswego, New York, in June — nine months after two fires at the facility triggered a supply crisis that forced Ford to halt F-150 production and contributed to a $1.5 billion to $2 billion EBIT headwind in 2025.
Healthy US market conditions could prompt management to lift guidance at Q2, the analyst added.
Ford entered the quarter with a full-year adjusted EBIT range of $8.5 billion to $10.5 billion, set after first-quarter results showed $3.5 billion in adjusted EBIT — boosted by a $1.3 billion one-time benefit from the Supreme Court’s invalidation of IEEPA tariffs.
Jefferies now projects full-year adjusted EBIT of $10.3 billion, the upper end of the guided range.
An approximately $800 million increase in EBIT takes adjusted free cash flow to roughly $4 billion, or $1.7 billion after supplier payments, according to the note.
Capital Allocation
Houchois cited several developments as evidence of “improved capital allocation and addressing old overhangs.”
Ford is investing approximately $5 billion in its Universal EV Platform, set to debut in 2027 with a mid-size electric pickup priced around $30,000.
In parallel, the company is converting its Kentucky battery plant toward energy storage systems, with plans to deploy at least 20 gigawatt-hours of BESS capacity annually by late 2027 under its newly created Ford Energy subsidiary.
Ford‘s European operations also appear to be in restructuring mode, a shift Houchois framed as part of the broader capital reallocation story.
UBS ‘holds‘ a Buy rating on the stock, citing a “credible path” to EPS above $2 by 2027.
EV Business
Ford‘s EV business remains a structural drag.
Model e recorded $4.8 billion in losses in 2025, and CFO Sherry House has guided another $4 billion to $5 billion in losses for 2026, with profitability not expected until 2029.
US electric vehicle sales fell 57% in the first half as the lineup contracted to the Mustang Mach-E following the discontinuation of the F-150 Lightning.
