General Motors shares are up more than 29% YTD. Should I invest?

Written by: Stanko Iliev
March 6, 2021
  • General Motors expects a further increase in revenues
  • Citigroup assigned a buy rating on GM with an $85 price target
  • GM will invest around$100M in two U.S. manufacturing plants to keep up with the demand for pickups

General Motors (NYSE: GM) shares have advanced more than 29% since the beginning of the year, and the current share price stands around $53. The company’s business continues to perform well, and Citigroup assigned a buy rating on GM with an $85 price target.

Fundamental analysis: Citigroup assigned a buy rating on GM with an $85 price target

General Motors shares have advanced above $55 in the first trading week of March, and the technical picture implies that the price could advance again above this price level. General Motors’ valuation is currently near an all-time high, and as long the price is above $40, this stock remains in the bull market.

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Wall Street’s three main indexes advanced on Friday after a three-day losing streak, supported by upbeat economic data. The U.S. economy created more jobs than expected in February, and the 10-year Treasury yield rose above 1.62% soon after the payroll data, its highest level in more than a year.

General Motors reported Q4 results in February; total revenue has increased by 21.7% Y/Y to $37.52B while Q4 GAAP EPS was $1.93 (beats by $0.34). The company reported an adjusted EBIT of $3.7B vs. $3.08B consensuses and announced that it expects 2021 EPS of $4.50 to $5.25.

“At this point, I would say that we’re highly confident about being able to hit our guidance that we put out to the Street,” said GM CFO Paul Jacobson. Citigroup assigned a buy rating on General Motors with an $85 price objective which is based on the EPS estimate and GM’s opportunity with rideshare networks.

“Another more overlooked catalyst is GM’s opportunity with rideshare networks, including the announcement last year of GM’s partnership with Uber around the Bolt. As far as the potential for earnings upside surprises, we do view GM’s 2021 guidance as somewhat conservative,” said Itay Michaeli, an analyst from Citigroup.

General Motors announced that it would invest around $100M in two U.S. manufacturing plants to keep up with the demand for pickups. The company’s business continues to perform well, still with a $74.6B market capitalization; this company is not undervalued and maybe now is not the best time for investing in General Motors shares.

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Technical analysis: Bulls remain in control of price action

General Motors shares continue to trade above $50 support after Citigroup assigned a buy rating with an $85 price target.

Data source: tradingview.com

If the price jumps above $55 resistance, it would be a signal to trade shares, and the next target could be around $60. Rising above $60 supports the continuation of the bullish trend for General Motors shares, but if the price falls below $50, it would be a strong “sell” signal.

Summary

General Motors reported better than expected earnings results in February, and Citigroup assigned a buy rating on GM with an $85 price target. General Motors’ valuation is currently near an all-time high, and as long the price is above $40, this stock remains in the bull market.