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JP Morgan: 2 auto shares that can be billed forward in 2021
The U.S. auto industry is looking up, despite the COVID pandemic – and that has led car watchers and Wall Street analysts to cautiously optimistic. Customers are starting to buy cars again, as Toyota Motor’s December figures show: the company said sales of 249,601 vehicles, up 20.4% year-over-year. Now, with vaccination rates on the rise and better spring weather in just a few months, automakers are forecasting increased demand – and for 2021, they expect substantial year-over-year gains. as they recover from depressed sales in the ‘corona an.’ Against this backdrop, JP Morgan beats the table on two auto stocks in particular, noting that each could jump at least 20% in the coming year. We scoured the TipRanks database to see what other Wall Street analysts had to say about them. Ford Motor (F) Ford Motor is the smallest of the Big Three in Detroit. Boasting a market capitalization of $ 45 billion, however, Ford shows that “small” is a relative concept. The company also has a loyal customer base and a strong sales base of the F-Series pickup trucks. Ford’s third-quarter revenue to $ 37.5 billion showed a recovery in prices. corona induced losses of 1S20; this is the strongest quarter to date for 2020 and exceeded expectations by 13%. Third-quarter net profit was $ 2.34 billion in the third quarter, a 22% year-over-year gain. Quarterly performance was bolstered by a 35% market share for F-Series trucks in the US market, a 22% increase in product shipments to China and Ford Credit’s best performance in 15 years. In recent months, however, Ford has taken a few hits. The company was forced to issue a pair of safety recalls in the North American market last November, on certain models of Taurus, Explorer, Edge and Lincoln Aviator vehicles. And earlier this month, Ford said it would cost $ 4.1 billion due to the closure of three manufacturing plants in Brazil. Reviewing Ford for JPM, analyst Ryan Brinkman notes several factors that will support the action. “We find Ford’s shares attractive given the valuation roughly on par with history despite a number of significant positives including (1) a significantly revamped vehicle lineup including new introductions to hot such as the Mustang Mach-E battery-electric crossover, the new Ford Bronco (> 190K reservations), Bronco Sport and upcoming F-150); (2) a refreshed F-150 has historically led to a substantial improvement in North American profitability, which we expect by 2Q21; (3) the “Bold Moves” Ford is taking to resize its international operations, including more recently in South America, we believe it will free up capital for use in initiatives that investors are likely to reward more, such than its electrification and self-sustaining efforts, ”Brinkman wrote. Consistent with his bullish comments, Brinkman improved his position in F from Neutral to Overweight (i.e. Buy), and set a price target of $ 14, which implies a 25% increase for the year to come. (To view Brinkman’s balance sheet, click here) Overall, Wall Street is inclined to be cautious here, where JPM is willing to take a risk. The stock has 12 recent reviews, breaking down to 4 buy, 7 take, and 1 sell. The shares are selling for $ 11.19, and the average price target of $ 10.01 indicates a decline of about 11% from current levels. (See Ford Market Analysis on TipRanks) General Motors (GM) General Motors, better known by its initials, is the largest of the Detroit automakers, with a market capitalization of $ 75 billion. The company has posted share gains of 58% in the past 12 months and is up 210% from its krone-induced low in March. GM’s recent performance has impressed auto industry watchers. In the third quarter, the company posted $ 35.5 billion in frontline, its best quarterly revenue in the past four quarters, and matching its 3Q19 results. Income was $ 4 billion, or $ 2.78 per share, an increase of 74% year over year. Fourth-quarter results are due Feb. 10, but preliminary sales figures show a 4.8% year-on-year gain, despite an 11.8% decline in US auto sales for the year . The company outperformed its industry in the fourth quarter, and for the full year, on the strength of its pickup and SUV lines – a testament to the continued popularity of midsize trucks in the mainstream market. Other top-selling models include the all-electric Chevy Bolt, which saw sales increase 26%, and the classic Chevrolet Corvette, which saw sales increase 20%. GM has also stepped up work on autonomous vehicles through the Cruise division. In January, the company launched the Cruise Origin, a production model for a driverless vehicle. The Origin is designed from the start as an autonomous vehicle, and therefore does not have a manual steering system. Future production will be concentrated at the GM Detroit-Hamtramck plant; for now, the vehicle is being tested on the streets of San Francisco. In his notes on GM for JP Morgan, analyst Ryan Brinkman sees steady growth ahead. “GM’s global 4T20 light vehicle production followed + 16% y / y, significantly better than expected in mid-October … GM’s 4T production trend was stronger than Ford’s, being given that the non-repetition of the UAW strike had a negative impact on 3Q and 4Q 2019… GM’s production in 4Q20 outside of North and South America registered a significantly better follow-up than expected at the mid-October, thanks to a strong recovery in sales in China, “commented Brinkman. To this end, Brinkman attributes GM to an overweight position (i.e. its one-year price target of $ 63 indicates its confidence in upside potential of 21%. Overall, GM built its consensus Strong Buy rating on a strong performance that drew 12 buy ratings in the past three months, down from just 1 Hold. This stock is selling $ 52.04, and the average price target of $ 55.50 implies a ~ 7% hike. (See GM market analysis on TipRanks) From great auto stock trading ideas to compelling valuations, visit TipRanks Best Stocks to Buy, a newly launched t hat tool brings together all of TipRanks equity knowledge. Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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