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Why General Motors Stock Is Up Today

By John Rosevear – Updated Jun 12, 2020 at 11:10AM

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An analyst's upgrade is helping GM's shares recover from Thursday's sell-off.

What happened

Shares of General Motors (GM -3.52%) were rising on Friday morning amid a broad-based market rally, following an upgrade from Goldman Sachs. 

As of 10:45 a.m. EDT today, GM's shares were up about 4.2% from Thursday's closing price.

So what

GM's shares, like much of the U.S. market, were bouncing on Friday morning after a broad-based sell-off on Thursday driven by concerns about a resurgence of coronavirus infections in parts of the U.S. that have reopened.

But GM was also getting a lift on Friday after an upgrade by Goldman Sachs analyst Mark Delaney. In a note released after the market closed on Thursday, Delaney raised his rating on GM's shares to buy from neutral, and hiked his price target to $36 from $25. 

Delaney said that GM's substantial exposure to the Chinese and U.S. markets will help give it a lift as those markets continue to recover in coming months. He thinks GM has additional opportunities to expand its profit margins through its ongoing restructuring, and as it shifts its product mix toward higher-margin pickups and SUVs.

Chevrolet Silverado pickup trucks on the production line at GM's plant in Flint, Michigan.

GM's U.S. pickup-truck factories are now running around the clock as the company scrambles to replenish depleted dealer inventories. Image source: General Motors.

Now what

GM's business, particularly in the United States, was looking quite strong before the outbreak of the COVID-19 virus forced it to idle its factories in mid-March. Sales of its crossover SUVs and new-last-year pickups were very strong, and all signs were that the company had recovered from the effects of an extended strike by the United Auto Workers last fall.

Of course, things have changed a lot since the first two months of 2020. But that pre-crisis strength should put GM in a relatively strong position, particularly in the U.S. but also in China, as it replenishes its inventories while consumer-discretionary spending recovers.

John Rosevear owns shares of General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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General Motors Company Stock Quote
General Motors Company
$32.09 (-3.52%) $-1.17
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
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