General Motors (GM) PT Raised to $30 at Daiwa Securities After China JV Income Drives Upside

July 30, 2020 6:53 AM EDT
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Price: $58.76 -2.2%

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Daiwa Securities analyst Jairam Nathan raised the price target on General Motors (NYSE: GM) to $30.00 (from $26.00) while maintaining a Outperform (2) rating after the company reported automotive operating loss of $0.8bn for the quarter, $1bn better than expected. The upside was led by lower losses at GMNA and profitability at China JVs. China JV income came in at $165mn compared to the breakeven results we had modeled, Excluding China JV income, GM’s International (GMI) lost $0.3bn in the quarter, inline with expectations.

The analyst stated "We are raising our 2020 EPS estimate to $1.95 from $0.35 prior to reflect 2Q:20 upside and better margin performance in 2H:20. Our 2H:20 EBIT estimate of $3.8bn is below the scenario provided by GM and reflects a 5% decline in GMNA volumes and limited improvement in GMIO. We see potential upside at GMIO from improvement in Korea operations as the region exports Trailblazers to the US. We expect GM to generate over $5bn in free cash flow in 2H:20".

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