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.