Summary

  • Automobile companies Ford and General Motors received a rating upgrade from broker Barclays.
  • Barclays stated that F & GM are trading at record low valuations, with both stocks hitting their 52-week lows earlier this week.
  • The consensus mean price target on F was US$13.04 and that on GM was US$46.09.

Broker Barclays upgraded automakers Ford (NYSE: F) and General Motors (NYSE: GM) to ‘overweight’ from its previous ‘equal-weight’ rating. Shares of both the companies rose by over 1% premarket, after the rating upgrade from the broker.

As per EODHD/Others data, Ford has a mean recommendation rating of 2.6 on five, while General Motors has a mean recommendation rating of 2.1 on five. Here, one represents a ‘strong buy’ rating and five indicates a ‘strong sell' rating.

Stating that both automobile firms are trading at historically low valuations, Barclays increased the ratings on them. On Thursday, F closed at US$10.14, while GM closed at US$28.80.

F Price Chart; Source: EODHD/Others

As at Thursday’s closing price, F was 8% lower on a YTD basis. The stock hit its 52-week low of US$9.63 earlier this week on October 31, 2023.

GM Price Chart; Source: EODHD/Others

Meanwhile, GM was 14% lower on a YTD basis as at Thursday’s close. The stock also hit its lowest point in 52 weeks earlier this week on October 30, 2023, at US$26.79.

An end to UAW strikes may lead to a shift in sentiment- Barclays

The broker anticipates a positive shift in sentiment as the United Auto Workers (UAW) strike concludes. Coordinated strikes by unions in the U.S. and Canada, initially commencing in September and expanding in October, are reaching their conclusion this week.

The strike will conclude following tentative agreements that secured significant wage increases for employees at the three major Detroit automakers. According to Barclays, even a slight reversal of the prevailing pessimistic sentiment has the potential to yield favorable outcomes.

The brokerage also noted that current low valuations fail to account for the impact of the UAW strike, as well as concerns regarding the transition to electric vehicles and a decline in earnings.

Brokers positive on F & GM stock price

EODHD/Others data shows that the consensus mean price target on F is US$13.04, a potential upside of 28.6% over Thursday’s closing price.

For F, some of the brokers positive on the stock include BNP Paribas and Punto Casa De Bolsa. BNP Paribas maintained an ‘outperform’ rating on F with a price target of US$14. Alternatively, some brokers also suggest selling the stock, with DZ Bank giving F a ‘sell’ rating and lowering the price target to US$13.71.

Meanwhile, brokers have largely kept a positive sentiment on GM as the consensus mean price target on the stock is US$46.09. This marks an upside potential of around 60% over Thursday’s closing price.

Broker Argus raised its rating on GM to ‘buy’, while BNP maintained an ‘outperform’ rating and gave GM a price target of US$45. The price target by DZ Bank was US$43 as on October 30, 2023. Broker Nomura gave GM a price target of US$33.50, a potential increase of 16.3% over GM’s closing price on Thursday.