A Buy initiation and an upgrade for General Motors
General Motors (NYSE:GM) shares rose more than 1% pre-market today after earning a Buy initiation and an upgrade today.
HSBC initiated coverage on General Motors with a Buy rating and a price target of $41.30. The analysts highlighted a 22% decline in GM shares over approximately five months due to concerns about the UAW contract, electric vehicle (EV) demand, and Cruise. Despite these concerns, GM’s profitability remains high, bolstered by over 80% of its profits coming from pickups and third-row SUVs, which currently have few affordable EV alternatives. Additionally, the bank noted that GM plans to repurchase over 20% of its outstanding shares by the end of 2024.
Meanwhile, Mizuho Securities upgraded the company to Buy from Neutral, raising its price target to $42.00 from $38.00. This decision reflects a change in sentiment towards GM, considering factors like the resolution of the UAW strike and resumed production. Mizuho anticipates several key catalysts for GM, including the estimated 2024 $1.5 billion UAW wage increases fully offset with around $2B in fixed cost reductions, a renewed focus on profitable EV production, halting investments in the loss-making Cruise, better production outlook post-strike, and a significant share repurchase plan.
Verizon Communications started at Outperform
Exane BNP Paribas initiated coverage on Verizon Communications (NYSE:VZ) with an Outperform rating and a price target of $47.00.
The company is set to report its Q4/23 earnings next month. Street estimates stand at $1.09 for EPS and $34.46B for revenues.
Carvana gains on JPMorgan upgrade
Carvana (NYSE:CVNA) shares surged more than 5% pre-market today after JPMorgan upgraded the company to Neutral from Underweight and raised its price target to $40.00 from $25.00.
The analysts noted that Carvana’s unique approach to online-only used vehicle retailing has granted it a significant early advantage in a fragmented market, allowing for rapid expansion. However, this growth came at a considerable cost, now proving detrimental amid reduced industry volumes caused by higher rates and prices.
The analysts acknowledged Carvana’s long-term potential, especially with its recent acquisition of ADESA’s physical auction business, which could provide a competitive edge. Nonetheless, they don’t view Carvana’s business model as exceptionally superior or disruptive, noting that well-funded traditional dealers are also growing and yielding solid returns in this competitive market.
While Carvana’s business model is scalable and likely to continue gaining market share in the fragmented used car sector, the analysts anticipate muted volume growth due to higher rates and a strategic pause in investments to manage profitability.
CyberArk Software upgraded at Wells Fargo
Wells Fargo upgraded Cyberark Software (NASDAQ:CYBR) to Overweight from Equal Weight with a price target of $250.00. Shares rose more than 1% pre-market today.
