Credit Suisse Upgrades General Motors (GM) to Outperform on Stronger-than-Expected Earnings Power

(Updated - January 11, 2016 9:49 AM EST)

Credit Suisse upgraded General Motors (NYSE: GM) from Neutral to Outperform with a price target of $38.00 (from $37.00), saying the company's earnings power is higher-than-assumed with the downside less severe.

"We believe heightened cyclical concerns on global Auto sector are over-stated in the near-term and thus we see a good risk / reward that strong GM Free Cash Flow can be sustained for longer than the Street expects," analyst Dan Galves commented. "We see many company-specific factors that will likely support higher-than-expected earnings power."

The firm raised GM 2015 / 2016 / 2017 EPS estimates to $4.85 / $5.45 / $5.65 from $4.80 / $5.40 / $5.50.

Galves highlights that GM is trading at a compelling 5.4x 2016 EPS, and 11x the trough earnings estimate.

However, more important than valuation is the fact that they believe GM can continue to outperform Street expectations due to substantial material cost savings (both supplied components and commodities) and a much better product cadence in '16 / '17.

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 $29.53 yesterday.

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