General Motors' Potential In EV Transformation Weighed By Analysts After Q1 Beat- Was This a 'Prove Me' Quarter For CEO Mary Barra?

General Motors Company (NYSE:GM) shares are trading higher on Tuesday after raising its outlook for FY24, following a first-quarter beat.

General Motors projects adjusted earnings per share of $9.00 – $10.00, higher than the prior view of $8.50 – $9.50.

According to Wedbush analyst Daniel Ives, the company is focusing heavily on profitability, with expenses continuing to be a big priority.

This was a major “prove me” quarter for General Motors, which shows the long-awaited turnaround for the company’s CEO, Mary Barra.

Importantly, honing in on the EV transformation, the company expects to be EV variable margin positive in the second half of the year, with at least a 60-point EBIT margin improvement this year and mid-single digit EBIT EV margin in 2025, including the benefits from the clean energy tax credits.

Ives reiterated an Outperform rating on the stock with a price forecast of $45.

BofA Securities analyst John Murphy said in a new investor note that there was optimism heading into the quarter and expectations for upside to 2024 guidance.

According to Murphy, the company’s liquidity levels should be sufficient to manage through volatility in the macro environment, while also proactively investing for the future and returning value to shareholders.

The company remains a leader in the industry in its Core to Future transition.

More specifically, General Motors’ ongoing execution and strength in its core business continues to enable the company to invest in EVs, AVs, and other areas to future-proof the business while continuing to return value to shareholders, the analyst adds.

Murphy reiterated a Buy rating on the stock with a price forecast of $75.

Goldman Sachs analyst Mark Delaney reiterated the Buy rating on General Motors with a price forecast of $50.

The analyst is eyeing the company’s updated 2024 outlook, margins, impact of pricing and cost, capital allocation, and the potential for shares to decline, the EV profit target, and Cruise to be focus areas on the earnings call.

However, the analyst cautioned that key risks for the auto behemoth relate to the auto cycle, market share, margins, FCF, and the company’s ability to profitably pivot to growth areas such as EVs and AVs.

Price Action: GM shares are trading higher by 5.36% to $45.53 at the last check Tuesday.

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