U.S. new car sales in 2015 rose to a record total of some 17.5 million units sold. The surge was the result of low unemployment (5% in December), low interest rates and low gasoline prices that put more cash in consumers’ pockets. Especially popular among U.S. car buyers were small sport utility vehicles and, as usual, pickup trucks.
General Motors Co. (NYSE: GM) had a very good year in 2015 and expects another in 2016. The carmaker raised its earnings forecast to a range of $5.25 to $5.75, a 25-cent hike on both ends, and added $4 billion to its share buyback program. GM also boosted its dividend by 6% to $0.38 per share. But 2016 is generally expected to be a relatively flat year for sales, and that curbed some of the enthusiasm from analysts. Here’s a sample:
- Goldman Sachs cut its price target from $46 to $40 and kept a Neutral rating on the stock.
- Deutsche Bank cut its price target from $37 to $34 and maintained a Hold rating.
- Bank of America Merrill Lynch reiterated a Buy rating and a $44 per share price objective.
The Merrill Lynch analyst elaborated:
No apparent abyss, but many are staring into it anyway … another very stellar for GM with a beat on EPS that drove full year 2015 adj EPS to $5.02. There has long been skepticism in GM’s ability to achieve $5/sh+ in annual earnings, which the company has now achieved. More importantly, GM expects earnings to accelerate further in 2016.
S&P Capital IQ maintained a $42 price target on GM stock, noting that product positioning in China helped the company gain share there while “North American performance, accounting for roughly all of net adjusted operating income for Q4, and more than 100% for the year.”
24/7 Wall St.Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
