Jefferies Upgrades General Motors to Buy, $99 PT
Jefferies analyst Philippe Houchois upgraded General Motors (NYSE: GM) from Hold to Buy with a price target of $99 (from $90).
“Our main takeaway from Q2 earnings was confidence that 2027 will further strengthen GM’s position within the US profit oligopoly and deliver $10+bn of real FCF.
We raise our above consensus estimates by ~6% for 2026-28, with 2027 EPS approaching $16.
The investment case is well understood but continues to surprise, including strategic options for cash use beyond buy backs. On ~5x 2027 earnings, a re-rating would be a bonus but is not needed to reach our $99 PT.
Adj EBIT improvement this year largely results from outside help ($1.9bn from US regulation on EVs and CO2 at mid point).
2027 will be more supported by product cycle, efficiency and some diversification.
New trucks Silverado/Sierra should launch late 2026 in a context of low inventory and stable share given GM’s already dominant position in full size segments (39% and 49% in pickups and SUVs) but improved content (SuperCruise) and updated engine mix.
We factor higher contribution from digital services (deferred $6+bn and new subscriptions) even as we wonder how long US consumers will pay for these given resistance in other parts of the world.
Assuming most of the repositioning (EV and reshoring) is over by next year, FCF in excess of $10bn (14% yield) can fund additional buybacks as well as diversification.”
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