GM's Stock Jumps After Analysts Point to "Positive Surprises" in an Upgrade

Shares of General Motors Co. (GM) rose in early trading on Tuesday following Deutsche Bank’s decision to upgrade its outlook on the automaker. The firm cited GM’s recent decision to shut down its robotaxi business and its aggressive stock buyback program as key factors driving the positive reassessment.

‍

Deutsche Bank analyst Edison Yu shifted his rating on GM’s stock from “hold” to “buy” and increased the price target from $56 to $60. This new target represents a potential upside of about 16% from current levels. By mid-morning, GM’s stock had gained 1.6%, reflecting renewed investor confidence.

‍

Yu acknowledged potential concerns about the broader economic cycle and uncertainties surrounding policies from the Trump administration. However, he argued that these risks were already well understood by the market, leaving room for potential “positive surprises” in GM’s performance.

‍

“While GM has already outperformed Ford significantly over the past year, we believe 2025 could follow a similar trajectory,” Yu noted.

‍

In 2024, GM shares surged by an impressive 48.3%, with the stock nearing a three-year high of $60.20 on November 25. Although GM experienced some pullback in December, its overall performance outpaced major competitors like Ford Motor Co. and Stellantis N.V., the parent company of Chrysler, Jeep, and Dodge. Ford’s stock declined 18.8% in 2024, while Stellantis saw its U.S.-listed shares plummet by 44%.

‍

In contrast, Tesla Inc., the electric-vehicle giant, enjoyed a 62.5% surge in its stock price last year. However, since GM exited its robotaxi business, its stock has dipped 1.8%, while Tesla shares have climbed 4.3%.

‍

One of the key drivers behind GM’s strong performance is its share buyback activity. According to the company’s third-quarter earnings report, GM reduced its outstanding shares by 19% year-over-year through an aggressive repurchase program. Furthermore, the company announced plans to buy back an additional 25 million shares during the fourth quarter, signaling continued confidence in its financial position and future prospects.

‍

Looking ahead to 2025, Yu expects GM to maintain stable earnings before interest and taxes (EBIT), holding steady relative to 2024 levels. In contrast, he anticipates Ford will face pricing challenges that may lead the company to lower its EBIT guidance.

‍

The combination of GM’s proactive financial strategies, such as share buybacks, and its decision to pivot away from unprofitable ventures like the robotaxi business has positioned the company for further success. While market uncertainties persist, Deutsche Bank’s bullish outlook suggests that GM is well-equipped to navigate potential headwinds and capitalize on emerging opportunities.

‍