Should you invest in GM shares as Wedbush gives an upbeat update after a meeting?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 12, 2021
  • General Motors shares edged higher 1.4% on Tuesday after an upbeat update from Wedbush.
  • The firm was impressed by discussions in a meeting with GM management.
  • It said it was even more confident in GM’s turnaround plans for the EV market.

On Tuesday, General Motors Co. (NYSE:GM) shares advanced 1.4% after a meeting with analysts from Wedbush sparked optimism. The firm said it was even more confident about GM’s turnaround plans for the electric vehicles market. 

Wedbush said it expects General Motors to convert at least 20% of its massive customer base to EVs within the next five years, and more than 50% by 2030. As a result, the firm sees a more positive growth trajectory for the automaker, regardless of any headwinds it may come across in the process.

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It sees GM becoming a potential software giant in the electric vehicles market, thereby significantly boosting its profit margins from subscription services. 

Analyst Dan Ives also said he expects GM to net an additional $2,000 profit per car sold after the turnaround.

The firm retained an outperform rating on GM shares with a price target of $85, implying an upside potential of more than 44% based on its price of $59, as of this writing.

GM is substantially undervalued

From an investment perspective, GM shares seem significantly undervalued at the current P/E ratio of 6.81. Moreover, analysts expect its EPS to grow by 14.13% next year, and at an average annual rate of 13.25% over the next five years.

Therefore, General Motors offers decent growth at incredible valuation multiples, making the stock an exciting option for investors.

Source – TradingView

Is a pullback inevitable?

Technically, General Motors shares appear to have recently spiked to overbought conditions, breaking out of a descending channel formation. Therefore, a pullback seems imminent, with some investors moving to take profits.

However, given Tuesday’s upbeat report and the company’s compelling valuation multiples, the current bull-run could continue for the foreseeable future.

Therefore, investors could target extended gains at about $63.90, while $54.22 and $49.15 are crucial support zones.

Is GM still a good bet?

In summary, although General Motors shares have spiked recently, the stock still looks substantially undervalued based on its P/E ratio of 6.81. 

Moreover, with Wedbush analysts providing an upbeat report after meeting with the company management, GM seems to have enough catalysts to push the stock higher.

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