General Motors share price forecast ahead Q3 results

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Oct 26, 2021
  • GM will announce third-quarter results this Wednesday
  • GM has proven improvements throughout Q2
  • Covid-19 and semiconductor shortage continue to pose risks

General Motors Company (NYSE: GM) is scheduled to announce third-quarter earnings results on Wednesday, October 27, before the market opens. General Motors shares have advanced from $41.95 above $64 since the beginning of the 2021 year, and the current price stands at $57.

Focus on electric vehicles

General Motors will announce third-quarter earnings results this Wednesday, and according to Credit Suisse, the company should post solid results despite the rise in commodity and labor costs. Dan Levy, an analyst from Credit Suisse, maintained his price target of $75 and added:

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General Motors showed investors the “potential for growth, EV leadership, and significant revenue outside core vehicle sales. GM’s goal to double revenue implies a tripling of earnings by 2030, which would make a case for the stock to be valued at over $100 today.

General Motors reported better than expected second-quarter results in August; total revenue has increased by 103.6% Y/Y to $34.2 billion, which was more than expected, while the GAAP EPS was $1.90 (beats by $0.42).

During its second-quarter earnings report, its management said that a full-year net income should be between $7.7 billion and $9.2 billion, while the adjusted EBITDA should be between $11.5 billion and $13.5 billion.

General Motors continues to generate steady revenue and a healthy profit margin even though the coronavirus pandemic and semiconductor shortage continue to pose downside risks.

The auto industry has been hit the hardest, and many big companies scaled back production of some of their largest, most profitable models because of the ongoing semiconductor shortage.

General Motors announced that it expected to lose about 200,000 units due to the chip shortage, but strong pricing and cost controls elsewhere should bring a good result in the third quarter.

General Motors continues to focus on speeding up electric vehicle adoption, and the company has a plan to launch more than 30 electric vehicles globally by 2025.

According to Wedbush Securities, General Motors is a golden opportunity, and it has the potential to become the EV market leader in North America.

Management hopes to drive higher margins as EV costs decline, and Wedbush Securities assigned a buy rating on General Motors with an $85 price target.

Technically, GM shares could advance above the current price levels if the company posts strong third-quarter results. On the other side, General Motor shares have seen massive gains since October 2020; the book value per share is around $34, and fundamentally looking, GM’s valuation is certainly not cheap.

$60 represents the current resistance

Data source: tradingview.com

The strong support level stands at $50; $60 and $65 represent the current resistance levels. If the price jumps above $60, it will signal to trade General Motors shares, and the next target could be $65.

On the other side, if the price falls below $50, it would be a strong “sell” signal, and the next target could be at $45.

Summary

General Motors is scheduled to announce third-quarter earnings results Wednesday, October 27, before the market opens, and if the company posts solid results, the share price could be above the current levels. Dan Levy, an analyst from Credit Suisse, maintained his price target of $75 while Wedbush Securities assigned a buy rating on General Motors with an $85 price target.

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