On Wednesday, Wells Fargo updated its outlook on General Motors (NYSE:GM), increasing the automotive company's price target to $30.00 from the previous $28.00. The firm has decided to keep its Underweight rating on the stock.
The revision reflects an adjustment in the earnings per share (EPS) estimate for the year 2024, which was raised from $4.45 to $5.00. This change is attributed to General Motors' stronger-than-expected performance in the first quarter, although it is tempered by a reduced production forecast.
Despite the increase in the price target, Wells Fargo's adjusted earnings before interest and taxes (EBIT) projection for General Motors stands at $7.6 billion, significantly below the company's own EBIT guidance of $12.5 to $14.5 billion.
Wells Fargo has also provided updates on its EPS projections for the subsequent years. The firm is maintaining its 2025 EPS estimate but has revised its 2026 EPS forecast down from $5.60 to $5.20. Furthermore, the 2027 and 2028 EPS estimates have both been reduced from $5.45 to $5.05.
The new price target of $30 is based on a multiple of 1.5 times the revised 2024 estimated EBITDA, which remains unchanged from the previous valuation method. This adjustment indicates Wells Fargo's continued caution regarding General Motors' stock despite the recent positive earnings report.
InvestingPro Insights
As General Motors (NYSE:GM) navigates through market challenges and opportunities, real-time data from InvestingPro provides a broader perspective on the company's financial health and stock performance. With a market capitalization of $52.06 billion and a remarkably low P/E ratio of 5.32, GM's valuation suggests that the stock could be an attractive option for investors seeking value. Additionally, the PEG ratio of 0.26 indicates potential for growth relative to earnings, which may align with the upward revisions of earnings estimates by 5 analysts for the upcoming period.
InvestingPro Tips highlight that GM's management has been actively repurchasing shares, a sign of confidence in the company's future. Moreover, the stock is trading at a low earnings multiple and offers a strong free cash flow yield. These factors could be particularly relevant for investors considering Wells Fargo's updated outlook and the revised EPS estimates. For those interested in exploring more about GM's financials and stock performance, there are an additional 12 InvestingPro Tips available, which can be accessed through the dedicated InvestingPro page for General Motors.
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