GM, Ford find new bulls that see their shares rise 40%
Two analysts new to Ford Motor and General Motors coverage find a lot to like traditional automakers – so much so that they expect stocks to gain about 40% from Wednesday’s prices.
Matt Portillo and Jeoffrey Lambujon, a team at brokerage firm Tudor Pickering Holt & Co., point out different positives in businesses.
Portillo notes that
(ticker: GM), for example, has a “pole position” in autonomous driving, an assessment that might surprise
(TSLA) since the electric vehicle pioneer was seen as a leader in driverless technology. And Lambujon is impressed by the recovery of Ford (F).
Tudor Pickering rates Buy stocks. Ford’s target price is $ 17 a share. GM is $ 76. Both imply gains of around 40% over the prices they are currently negotiating.
The new buys, released on Monday and picked up by note aggregators on Tuesday night, haven’t helped stocks much yet. Ford is down about 1.3% in the past two days. GM fell about 2.5%. Both declined for two consecutive days.
But the whole market is down on rising inflation fears. the
Dow Jones Industrial Average
are both down about 1.5%. Tesla stock, for another comparison, fell about 4% in session Wednesday.
Tesla CEO Elon Musk has been talking a lot about autonomous driving lately and plans to roll out a new version of the company’s autonomous driving software for testing in the coming weeks. The software still requires drivers to be behind the wheel of the vehicle, but better driver assistance features are a competitive advantage and will ultimately lead to business opportunities such as robotaxi services.
However, GM also has an autonomous driving solution. He owns Cruise, a software start-up, which is testing a sophisticated robotaxis. For GM passenger cars, the premium driver assistance feature is called Super Cruise. “The value of [Cruise] may continue to increase as the business works [robotaxi] commercialization by 2022 in the United States, ”said Portillo Worte.
Lambujon mentions that Ford has also invested in an autonomous vehicle in software company Argo AI. Its rating, however, appears to be driven by improving profit margins. Ford posted strong operating profits in the first quarter despite the global semiconductor shortage forcing automakers to cut production significantly.
With the new buys, about 48% of analysts covering Ford stock are buying. The average purchase ratio of S&P shares is around 55%. GM is more popular. About 90% of analysts rate Buy stocks.
Despite a different feeling on Wall Street, 2021 has been a good year for Ford and GM investors. Shares are up about 37% and 32% year-to-date, respectively, better than comparable gains from the S&P 500 and the Dow Jones Industrial Average.
Write to Al Root at [email protected]