The Ratings Game: GM stock rallies on record first quarter that leaves Ford, Tesla in the dust


General Motors Co. stock on Wednesday rallied toward its best in a month after the car maker reported record first-quarter results, kept its outlook intact, and sounded optimistic about its electric-car and autonomous-vehicle prospects.


shares were on track for their largest one-day percent increase since April 5. The shares were still down about 7% from an April 6 record close of $61.94, and traded as high as $57.89 in midday trading Wednesday.

The car maker earlier Wednesday reported an adjusted first-quarter profit of $2.25 a share, beating Wall Street expectations of an adjusted EPS of $1.12. Sales hit $32.5 billion, coming in slightly under forecast.

Tesla Inc. last week reported mixed first-quarter results, with sales that despite a 70% rise year-over-year were a tad below FactSet consensus.

Ford also reported a massive quarterly beat last week, but the results were overshadowed by a profit warning and expectations of more production cuts in the coming months due to the continuing chip shortage.

Wall Street was bracing for similar snags for GM, but as that didn’t come to pass, the stage was set for a share rally.

“We thought expectations were low after Ford’s release last week and many were anticipating a guidance cut, but (GM) maintained guidance, so we’re seeing a relief rally in the shares today,” CFRA analyst Garrett Nelson said.

As GM’s revenue was down 0.7% from first quarter 2020, margin improvement carried the day, Nelson said. That margin improvement could be short-lived “as various cost pressures mount and consumer spending moderates as stimulus impacts wane,” he said.

Moreover, sales of some of GM’s new EV models are likely to disappoint, he said. CFRA kept its neutral rating on GM stock and raised its 12-month price target by $5 to $60.

On a call with analysts following results, GM Chief Executive Mary Barra highlighted the company’s strides toward offering more EVs or redesigning existing ones, including a summer revamp for the Chevy Bolt and a new “SUV inspired” Bolt as well as an electric Silverado pickup truck.

Barra said GM’s Cruise autonomous-driving unit is showing “exciting progress” in test drives and focusing on full autonomy. Cruise will continue to add features that could lead it to be close to full autonomy later in this decade.

It “opens up really more possibilities than I think we can outline today,” she said.

Adam Jonas at Morgan Stanley said GM is likely to see the worst of the supply shortages and materials price increases in the current quarter. But GM kept its targets, which was a relief to investors, he said.

Jonas reiterated the equivalent of buy rating on the stock and kept GM as his top pick among U.S. auto stocks.

GM has shown progress in its strategy to transition to offering EVs only by 2035 and “we believe the best has yet to come,” he said.

Shares of GM have gained 170% in the past 12 months, compared with gains of around 46% for the S&P 500 index

in the same period.

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