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Analysts Lower Ratings on GM, FCA

Falling sales, rising incentives and oil prices dim view on makers.

by on Dec.28, 2016

Despite the introduction of new products and development on others like the autonomous Bolt with GM CEO Mary Barra, analysts cut GM's rating.

With sales peaking, incentives climbing, oil prices rising and production cuts coming, 2017 is already shaping up as challenging year for the global auto industry.

Some analysts have begun to scale back their outlook for the coming year, predicting that sales of new vehicles will decline as the boom that characterized 2015 and 2016 begins to fade.

By the Numbers!

The notion automakers are heading for difficulties was reinforced this week as Zacks Investment Research reduced its ratings on two the prime beneficiaries of the auto boom that got rolling back in 2010, General Motors Co. and Fiat Chrysler Automobiles N.V.

Zacks cut its rating on shares of Fiat Chrysler Automobiles from a buy rating to a hold, noting that several other analysts have reduced their ratings of FCA from a sell rating to a strong sell rating. Fiat Chrysler Automobiles NV has a consensus rating of Hold and a consensus target price of $7.66, Zacks wrote in its report.

(Profits tumbling, Hyundai on cost-cutting mission. For more, Click Here.)

General Motors also was downgraded by Zacks Investment Research from a “buy” rating to a “hold” in a report released Tuesday.

Even as Fiat Chrysler revamped its line-up and its production facilities to match, many analysts cut their ratings on FCA expecting a tougher 2017.

“General Motors has outperformed the Zacks-categorized Auto Manufacturers Domestic industry so far this year,” according to Zacks’s report.

“Most of the company’s estimates have increased over the last 60 days. It has a positive record of earnings surprises in recent quarters. The automaker is increasing capacity investment in emerging markets to enhance its global sales. It is also focused on investment in innovative technologies and vehicles for sustained growth. Further, the company is gaining new contracts to expand its business.

(Click Here to see what classic cars to buy in 2017.)

“However, series of recalls, scaling down or shutting manufacturing operations in some regions and challenging South American market are headwinds for the company,” the report same noted.

Goldman Sachs Group Inc. lowered General Motors to a “neutral” rating and decreased their price objective for the company from $37 to $29. One analyst has given the stock a sell rating, 18 have given a hold rating, nine have issued a buy rating and one has issued a strong buy rating to the company.

The company has an average rating of “Hold” and a consensus price target of $35.25, according to the Zacks’ report.

(U.S. car sales expected to set another record in 2016. Click Here for the story.)

So far this year, while the Standard & Poors average is up 10%, GM’s stock is up 3% and Fiat Chrysler Automobiles Inc. and Toyota Motor Corp. shares are off by 3% in trading on the New York Stock Exchange, according to Wall Street 24/7. Ford Motor Co. shares are down sharply, off 12%. during 2016.

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