Yesterday, General Motors (GM) released its internal report on what went wrong with its recalls, or lack thereof. Today Deutsche Bank’s Rod Lache and team say the worst is behind the U.S. automaker. They explain:
AP …the questions that investors want answered (i.e. whether GM will demonstrate a sustainable and competitive business with products and brands that achieve some consistent level of success in terms of stable market share and pricing) are not yet answerable. We expect investors to remain somewhat cautious on GM for the time being, given the widely held view that the company is currently at the peak of their product cycle but we maintain our Buy rating on valuation. We continue to believe that our approach to modeling and valuing GM (i.e. incorporating an abundance of conservatism with regard to pricing and market share assumptions) is most reasonable at this juncture. And we continue to derive profit and cash flow projections that support a $41 valuation.
Sterne Agee’s Michael Ward lowered his second-quarter estimate for Ford Motor (F) because of higher taxes but still considers it a buy. He explains why:
In the near term, we expect Ford's stock to remain rangebound pending the launch of the new full-sized pickup trucks. Longer-term, an improved balance sheet, earnings acceleration in 2015, and yield support, along with the likelihood of more favorable capital allocation for shareholders over the next few years, support our Buy rating.
Shares of General Motors have gained 1.9% to $36.65 at 1:41 p.m., while Ford has risen 2% to $17.02.
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