Morgan Stanley has raised the GM stock price target from $53 to $57, with Morgan Stanley Analyst Adam Jonas reiterating a “Buy” rating for shares of General Motors stock.
In a recent report from The Street, Jonas pointed to The General’s impressive connected services portfolio, which currently holds an estimated valuation of roughly $8 billion.
“GM is offering fleet services today and appears to have big plans to grow the business,” Jonas said. “At GM’s 2020 capital markets day, the company discussed licensing, subscriptions and customer insight/data opportunities from the connected fleet.”
Further, Jonas pointed to General Motors’ proprietary semi-autonomous driver technology, also known as GM Super Cruise.
“Just like Tesla monetizes autonomy through its FSD (full self driving) product, it seems GM is ready to increase monetization of its own autonomy solution called ‘Super Cruise,'” Jonas said.
General Motors introduced Super Cruise with the 2018 Cadillac CT6, and currently offers the feature on the 2021 Cadillac Escalade, 2021 Cadillac CT4, and 2021 Cadillac CT5. The number of vehicles offering the feature is expected to expand significantly in the next few years, and will even include towing capabilities with the upcoming 2022 GMC Sierra and 2022 Chevy Silverado.
Although GM Connected Services is currently valued at about $8 billion, Jonas said that “the market may not be willing to give credit to GM shares for their Connected Services business today.” Additionally, GM’s discounted cash flow gave Morgan Stanley a base case valuation of $80 billion for GM Connected Services, or $54 per share of GM stock.
Morgan Stanley estimates General Motors will have roughly 98 million vehicles in its global fleet by 2022, and with every $1 of monthly average revenue per user on its installed base case, the company generates $1.2 billion in revenue.
GM stock value was steady during the week of December 21st through December 24th, with shares closing the week at $41.58 per share, a 1-percent increase compared to the previous week’s closing value of $41.01.