Shares of General Motors Co (NYSE:GM) continued to climb in early trading on Monday, after the Detroit automaker announced a $10 billion buyback last week.
While production has resumed with the end of the United Auto Workers (UAW) strike, there are some “idiosyncratic catalysts” ahead, according to Mizuho Securities.
The GM Analyst: Vijay Rakesh upgraded the rating for General Motors from Neutral to Buy, while raising the price target from $38 to $42.
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The GM Thesis: While UAW cost increases have been resolved with a five-year agreement, the company has indicated that the wage increases are fully offset by planned fixed cost reductions of around $2 billion, Rakesh said in the upgrade note.
General Motors has also decided to pause “money-losing Cruise investments” and scale back Commercial Brightdrop vans from global to targeting only North America, the analyst stated.
“A more balanced Ultium EV ‘smart’ ramp’ aligned with profitability, we believe could imply a near-term modest mix shift back to ICE from EV versus prior expectations,” he added.
Production is expected to “snap back” in 2024, “after the 5-week partial interruption” this year, which impacted the production of around 95,000 units, Rakesh wrote. He added that the focus would be on the production of high margin ICE trucks.
GM Price Action: Shares of General Motors had risen by 1.79% to $32.94 at the time of publication on Monday.
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