RBC: GM Won?t Lose Its Way on the Long & Winding Road

[Stocks-to-Watch]

Shares of General Motors (GM), which fell to a new intraday low yesterday below its November IPO price of $33, is trending upward today, adding 1.3% in recent afternoon trading.

Investors had mixed reactions to the company’s earnings news, initially sending shares up before they skidded in the latter part of the day. Today, RBC Capital Markets analyst Seth Weber reiterated his Outperform rating and $42 price target, writing in a research note that the road ahead might be a bit bumpy, but GM should still emerge unscathed.

Weber conceded that near-term, higher costs and mix shift toward smaller, lower margin vehicles would weigh on the company, and tweaked his industry sales and North American market share assumptions lower.

However, he maintained that his larger bullish thesis on GM remains in tact, and sees weakness in the stock as a buying opportunity: “We expect GM to be a leading beneficiary of an improving North American cycle while it also enjoys market-leading positions in the BRIC regions. As cost pressures abate, we expect GM to eventually show improving operating leverage with higher volumes and efficiencies.”



Original Article Source by Barrons.com