HomeMarket NewsBarclays Upgrades General Motors and Ford on "Historically Cheap" Valuations

Barclays Upgrades General Motors and Ford on “Historically Cheap” Valuations

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Barclays has upgraded Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) to Overweight ratings, after previously having both auto stocks set at Equal-Weight. This upgrade comes following the resolution of the United Auto Workers strike, which is seen as removing a major obstacle for these two auto giants. Additionally, the two Detroit automakers are now presented with an opportunity for recovery, thanks to historically cheap valuations.

Barclays analyst Dan Levy highlighted the different pressures faced by these companies, leading to historically low trading multiples. Despite acknowledging that structural concerns are unlikely to dissipate soon, Levy believes that even a modest reversal of sharply negative sentiment could generate attractive upside for these stocks. Barclaysโ€™ price targets of $37 for General Motors (GM) and $14 for Ford (F) imply significant potential gains for new investors. Of the two, Barclays has a preference for General Motors (GM) over Ford (F). Furthermore, the Seeking Alpha Quant Rating on GM is Buy, while Ford has a Hold rating according to quantitative analysis.

In premarket action, shares of Ford (F) rose by 1.25%, while General Motors (GM) gained 1.88%. Both auto stocks have experienced double-digit declines over the past six months due to the UAW strike drama.

Historically Cheap Valuations Present an Opportunity for Recovery

Barclaysโ€™ decision to upgrade Ford and General Motors is founded on the attractive valuations of these companies. Historically low trading multiples have been driven by various pressures on the auto industry, presenting an opportunity for recovery and potential gains for investors.

Resolution of UAW Strike Removes Major Obstacle for Auto Giants

One of the significant factors behind Barclaysโ€™ upgrade is the resolution of the United Auto Workers (UAW) strike. This strikes removal alleviates a major obstacle faced by both Ford and General Motors, opening the door for growth and improved performance.

Different Pressures Contribute to Historically Low Trading Multiples

Analyst Dan Levy emphasizes the different pressures that have led to the historically low trading multiples of Ford and General Motors. While structural concerns persist in the industry, even a slight reversal in negative sentiment can result in substantial gains for these stocks.

Ford and General Motors: Price Targets and Preferences

Barclaysโ€™ price targets for Ford and General Motors are set at $14 and $37, respectively, implying significant upside potential for investors. The preference between the two lies with General Motors, as stated by Barclays. Moreover, the Seeking Alpha Quant Rating for GM is Buy, while Ford receives a Hold rating based on quantitative analysis.

Market Response: Ford and General Motors

Following the Barclays upgrade, Fordโ€™s stock price increased by 1.25% during premarket trading, while General Motors experienced a gain of 1.88%. Both companies had seen declines in the past six months due to the UAW strike, but this upgrade signals potential improvements in performance.

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