General Motors Corporation (NYSE:GM)
The revelation by General Motors Corporation (NYSE:GM) that it intends to idle operations at an Indiana facility as stockpiles rise is seen by Bank of America as a rationale to purchase the company rather than sell shares.
As part of its announcement, the automobile manufacturer based in Detroit mentioned that its stockpiles had grown over the preceding month due to an improvement in production brought about by the reduction of problems with the supply chain, even though customer demand had remained relatively unchanged.
The report confirms our view that the automakers would be more cautious on output as they concentrate more on pricing and earnings, says analyst John Murphy, so although he appreciates the worries, the news is encouraging. Furthermore, Murphy said that the short-term effect on EPS is manageable. On looking further into the future, BofA maintained its Buy rating on GM stock based on the belief that the firm would continue to be a leader in the industry due to its “Core to Future shift.”
GM’s ability to increase its investments in electric cars and autonomous vehicles is crucial to its future success. Therefore the company’s current focus on execution and strength in its core business is highly valued. As part of its bullish thesis, BofA thinks that value will be unlocked over time due to General Motors’ efforts to continue developing all of the critical components for the future of mobility services.
The price objective of $70 that BofA has placed on GM stock represents more than 75% potential for the auto stock to increase in value.
Featured Image: Freepik @ azerbaijan_stockers
