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Piper Jaffray Starts General Motors (GM) at Overweight; 5x P/E, 25%+ ROIC, 5.1% Yield, 10%+ EPS Growth

June 9, 2016 4:19 PM EDT
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Price: $45.28 +1.55%

Rating Summary:
    25 Buy, 13 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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(Updated - June 10, 2016 6:59 AM EDT)

Piper Jaffray initiated coverage on General Motors (NYSE: GM) with an Overweight rating and a price target of $41.00. The analyst notes valuation at 5x P/E, 25%+ ROIC, 5.1% yield and 10%+ EPS growth.

Analyst Alexander Potter commented, "We are initiating coverage on GM with an Overweight and a $41 price target. GM is a bargain with a current multiple of only 5.2x our FY16 EPS estimate (vs. a post-recession range of 5x-12x). The company couples a steady dividend (5.1% yield) with a generous buyback program, not to mention best-in-class ROIC and almost $7/share in net cash. We think investor pessimism re: the U.S. auto & truck cycle is already reflected in the multiple, and if our expectations for flattish demand prove accurate, GM should have no trouble defending 10%+ margin in North America. Relative to Ford, GM probably doesn't have the same prospects for margin expansion in Europe – and GM's industry-leading position in China makes it a target for competition – but at this multiple, these topics don't worry us."

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 $29.57 yesterday.



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