Written by Cláudio Afonso | LinkedIn | X
Evercore ISI analyst Chris McNally released Tuesday a new research note commenting on the third quarter results reported by General Motors earlier in the day.
Following the better than expected results and increased full-year guidance, the analyst reaffirmed an Outperform rating on the stock and a $55.00 price target. As of the time of writing, GM shares are trading 9% higher at $53.30.
The company reported $48.8 billion of revenue and an EBIT-adjusted of $4.1 billion.
“GM comes up BIG AGAIN Q3 with $2.96 EPS vs cons $2.45 (EBIT of $4.1Bn vs our/cons $3.7Bn/$3.4Bn on $300-400MM NA beat) with solid upper-end raise to FY EBIT/EPS as well (“$14-15Bn EBIT”; “$10-10.50 EPS”) & a whopping $2-3Bn FCF raise to $12.5-$13.5Bn,” McNally noted.
“We believe investors were mostly in the “high-end or $14-15Bn” of guide camp with very few “tiny raise” expectations putting the guide roughly in line w/ price/FCF a nice added bonus,” the analyst added.
“Looking to ‘25 – investors are confused how to think about the ‘25’s EBIT walk given the GM Analyst Day disclosure that ’25 should see a “$2-4Bn” tailwind from lower EV losses YoY (implying ’24 “ICE EBIT” was $18-19Bn before ~$3-4Bn EV loss),” the analyst noted.
The firm sees Trump’s potential victory in the upcoming U.S. Presidential elections as something that can affect EV makers with the “potential IRA elimination”, lower Zero Emission Vehicles credits and a tariff on imported EVs from Mexico.
“As seen with Ford’s ’24 $5Bn+ EV loss however….selling LESS EVs….wouldn’t make the (fixed cost) EV loss go away which is why we see a Trump win as a triple negative for GM & D3 sentiment in near-term: 1) IRA potential elimination – makes US EV industry/GM sales likely go DOWN YoY (and GM EV EBIT LOSS LIKELY WORSE THAN PLANNED); 2) ZEV credits may go down (which may be >$500MM in GM ’25 walk) & 3) MexicoTariff potential (most investors here seem to take the stance that Trump is more bark vs bite),” the analyst wrote in the reserach note.
“Given implied odds of Trump now rising to 60-70%, at $50, we believe that FEAR is not high enough in GM stock in the near-term (could some “fear” in GM could actually be a good thing which ultimately raises the multiple vs its <5x all year long??),” Evercore ISI analyst added.
GM reported adjusted earnings per share of $2.96, surpassing the $2.43 expected by analysts, with revenue reaching $48.76 billion, also exceeding forecasts of $44.59 billion.
In the third quarter, General Motors delivered 659,601 vehicles in the United States, up 3% year over year but down 5% from the 696,086 vehicles delivered between April and June.
Of the 659,601 vehicles delivered in the third quarter, 32,095 were electric vehicles, up 60% year-over-year and up 46% sequentially.
In July, GM announced it was further scaling back its all-electric vehicle plans, postponing the launch of a second U.S. electric truck plant and delaying the debut of Buick’s first EV.
Written by Cláudio Afonso | LinkedIn | X
