Wall Street has turned conservative on the outlook for shares of General Motors (GM) and Ford (FORD) amid factors such as cost-driven inflation, rising interest rates and a persistent shortage of parts. In contrast, electric car maker Tesla (Tesla) is still bullish on the grounds that Tesla’s fundamentals are strong and will support future stock performance.
“Barron’s” reported that on March 28, Citigroup analyst Itay Michaeli issued a research report, lowering the estimated value of GM’s operating profit in 2022 from $14.7 billion to $13.9 billion. The forecast range is $13 billion to $15 billion. Michaeli lowered his price target on GM’s stock to $95 from $100, but remains a top pick.
Michaeli cut GM’s price target, citing rising costs, weak sales in China, factory shutdowns due to chip shortages, and Japan’s SoftBank Group (SoftBank) selling off all of its stake in self-driving car company Cruise, which GM will take over for $2.1 billion.
Michaeli also lowered Ford’s 2022 operating profit forecast to $11.6 billion from $12.2 billion, falling on the lower edge of Ford’s forecast range of $11.5 billion to $12.5 billion. He lowered his price target on Ford to $18 from $23 with a “Hold” rating.
Ford shares have fallen about 18% over the past two months, while GM shares have fallen 16% and the S&P 500 has risen about 4% over the same period. Tesla shares have been relatively supportive, rising 10% over the past two months.
The report pointed out that Tesla’s stock price was strong, including Wall Street analysts were bullish on Tesla’s fundamentals. For example, on the 25th, Royal Bank of Canada (RBC) analyst Joseph Spak revised up his forecast for Tesla’s first-quarter delivery numbers to more than 325,000 from the original 316,000.