General Motors shares should trade at $36 per share over the next 12 months, according to Standard & Poors, which has re-instituted coverage of GM stock in the wake of last week’s successful IPO.
That would be a roughly 10% bump from the maker’s $33-a-share price during the initial public offering.
“We expect the slimmed down GM to earn $2.78 (per share) in 2010,” Efraim Levy, S&P auto analyst said in a note to investors.
GM emerged from its bankruptcy filing with reduced operating and borrowing costs, noted Levy, and a greater focus on its four remaining vehicle brands, having dropped or sold four others.
“With our forecast for rising industry sales volume in the U.S. and most other regions in 2011, partly offset by higher raw material costs, we expect the company to generate earnings of $3.62 (per share) in ’11,” the analyst forecast. “Based on historical and peer P/E (price/earnings) analyses, we initiate our 12-month target price of $36, or 10 times our 2011 estimate and a modest premium to peers,” Levy said.
Meanwhile, GM announced it will restructure its business in Africa to capitalize on new opportunities. Tim Lee, President of GM International Operations, said starting January 1 African operations will be split into two distinct regions.
GM North Africa will include Libya, Algeria, Tunisia, Morocco, Western Sahara and Mauritania. These countries will be integrated with GM Egypt under the leadership of GM Egypt President and Managing Director Rajeev Chaba.
GM Sub-Saharan Africa will include other countries on the continent. They will be integrated with GM South Africa under the leadership of GM Africa President and Managing Director Edgar Lourencon.
“Africa’s emerging markets offer tremendous long-term potential for General Motors,” Lee said. “Our new business structure will align our growing business in Africa with the rest of GMIO and provide better visibility for the continent within our entire company.”
Expanding operations abroad is a critical part of GM’s turnaround strategy. The maker already generates about two-thirds of its unit volume outside North America, though overseas operations account for a lower share of revenues.
The maker is stepping up efforts in China, today unveiling the first model to be offered through the new Baojun channel it is operating in a joint venture with SAIC and Wuling, and aimed at the next generation of first-time Chinese car buyers. (Click Here for the full story.)
Meanwhile, GM and SAIC recently announced a new memorandum of understanding which they believe will not only expand their operations in China but help them penetrate other emerging markets, notably including India.