General Motors (GM) shares are expected to continue their recent upward trend following a pair of new Buy ratings, while Ford Motor shares did not fare as well, receiving no new Buy ratings.
Wall Street Favors GM over Ford
These days, GM stock is preferred over Ford shares by Wall Street investors.
On Sunday evening, Mizuho analyst Vijay Rakesh upgraded GM stock from Hold to Buy. He also raised his price target for the stock from $38 to $42 per share. The closing price for GM stock on Friday was $32.36.
Rakesh questioned the timing of his upgrade, considering the negative sentiment surrounding GM stock. Since July, when labor issues began to concern investors, shares have experienced a 16% decline. Additionally, GM’s self-driving taxi unit has encountered setbacks, with its license in California being suspended in October due to an accident.
However, Rakesh believes that going against the current sentiment can be a smart move. Low sentiment may act as a catalyst for buying a stock, but only if the outlook is positive. Rakesh explained, “Why upgrade? The UAW strike is in the rearview mirror, production has resumed, and we see idiosyncratic catalysts.”
These catalysts include a recent announcement of a $10 billion share repurchase, cost savings plans implemented to offset UAW wage increases, and a renewed focus on electric-vehicle profitability.
GM Stock Rises, Ford Stock Declines in Premarket Trading
General Motors (GM) stock experienced a 1.6% increase in premarket trading, outperforming the S&P 500 and Dow Jones Industrial Average futures, which saw declines of 0.4% and 0.3% respectively.
On the other hand, Ford shares exhibited a slight dip of 0.2% during premarket trading.
GM’s stock received a boost from HSBC, who recently launched coverage of both GM and Ford stocks. HSBC rates GM shares as a Buy and Ford shares as a Hold. They have set a price target of $41.30 per share for GM stock and $11.30 per share for Ford stock. It’s worth mentioning that Ford closed at $10.58 on Friday.
When it comes to popularity on Wall Street, GM takes the lead over Ford. Around 65% of analysts covering GM stock rate it as a Buy, while approximately 48% rate Ford shares as a Buy. The average Buy-rating ratio for stocks in the S&P 500 stands at roughly 55%.
Analysts have set an average price target of about $45 for GM stock, indicating a potential 40% increase from its current levels. On the other hand, the average price target for Ford stock is around $13.25 per share, representing a roughly 25% increase.