Deutsche Bank Slices Numbers at GM (GM) But Keeps Shares at 'Buy'

Deutsche Bank analyst Rod Lache lowered estimates and his price target on General Motors (NYSE: GM) from $48 to $41 but maintained a Buy rating.

Lache said, "Looking forward, GM’s product cadence is likely to moderate, and GM faces a number of new challenges. So we are adjusting our assumptions to incorporate what we believe to be very conservative assumptions. We are lowering our GM pickup truck market share assumption, and assuming further overall market share erosion in 2015 (we assume 17.0% U.S. market share for 2015 vs. 17.5% in 2014 and 18.0% in 2013). In the interest of conservatism, we also now incorporate significant price deflation ($950/unit in 2015 for the trucks, and 1% for all other vehicles)."

He added, "Ultimately, we believe that the assessment of GM boils down to opportunities for cost improvement vs. opportunities for revenue improvement. At this point, while the revenue side of the equation is in doubt, GM’s current cost structure ($25 bn fixed cost in North America), and prospective cost reduction ($5+ bn company-wide vs. 2014) should support decent profits and cash flow under a variety of conservative assumptions. This leaves us with the conclusion that valuation supports the stock. We are adjusting our 2014 and 2015 estimates to $2.58 (includes $1.5bn for recalls) and $4.20 from $3.38 and $4.80. And we are lowering our target to $41 from $48 (DCF derived; now incorporates $4 bn for recalls/fines as a conservative placeholder)."

For an analyst ratings summary and ratings history on General Motors click here. For more ratings news on General Motors click here.

Shares of General Motors closed at $33.30 yesterday.

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