Tudor Pickering has raised its General Motors stock price target from $75 to $95, with the Houston-based investor firm expressing increased confidence in the automaker’s electric and autonomous vehicle strategy.
According to Market Screener, Tudor Pickering believes the market will soon revalue GM stock based on the higher profit margins of its technology, such as its Ultium lithium-ion batteries and Ultium Drive electric motors. It is also encouraged by the automaker’s newly launched BrightDrop business, with the fleet market rapidly moving toward electrification and presenting new growth opportunities.
GM’s Cruise self-driving vehicle firm is another important aspect of the automaker’s current strategy, Tudor Pickering said. It says Cruise is “one of the most undervalued components,” and believes the market will grow to appreciate its ownership of the company over the next year. GM reported owning an 82.7 percent stake in Cruise as of the end of 2019. Cruise also counts Honda and Japan’s SoftBank among its backers and recently entered a tech partnership with Microsoft.
“We believe (General Motors) is well positioned to lean into the industry’s transition towards electrification at an attractive valuation while bolstering equity upside through technological innovation on both the connectivity and autonomy front,” said Tudor Pickering analyst Matt Portillo. “Our work suggests that GM’s shift in its business model over the last three years has positioned the company to outperform as management is charging ahead on electrification, while vertically integrating battery technology and taking a leading position in autonomy.”
In addition to its tech-related investments, Tudor Pickering also said GM’s current product portfolio and focus on profit margins inspire additional confidence in its stock performance.
“Further, the combination of legacy restructuring, a fleet refresh and new product offerings should help drive margin expansion as the auto market recovers while our forecasted acceleration,” Portillo added.
GM stock value stood at $58.28 at the time of publication, up 0.93 percent from market opening.