While UBS sees tariffs adding to the company’s costs, it believes there will be no pass-through effect to consumers.
General Motors Co. (GM) stock received a nice lift in Wednesday’s early premarket session following a bullish recommendation from a Wall Street firm.
GM’s stock climbed over 2.5% to $60.15 in premarket, as it remains on track to go past the $60 level for the first time since November last. UBS analyst Joseph Spak upgraded GM shares to ‘Buy’ from ‘Neutral’ and also revised up the price target to $81 from $56, according to the excerpts of the note published by The Fly. The new price target implies the stock has upside potential of 38% from the last close.
Spak believes GM’s North American margins will likely return to the company’s existing target of 8%-10% as opposed to the consensus forecast of 6%-6.5%. Accordingly, UBS’s current 2026 and 2027 earnings estimates for GM exceeded the consensus estimates by 35% and 42%, respectively.
While UBS sees tariffs adding to the company’s costs, it believes there will be no pass-through effect to consumers, given that the automaker has several levers to offset the headwind. The firm expects the Federal Reserve rate cuts and the U.S. capital expenditure cycles to potentially benefit GM.
After slashing the Fed funds rate by a quarter point last week, the central bank is widely expected to reduce rates through early 2026. Lower interest rates are favorable for automakers, given they sell big-ticket items.
On Stocktwits, retail sentiment toward GM remained ‘bearish’ (39/100) as of early Wednesday, and the message volume on the stream was ‘low.’
GM stock has gained about 11% this year, outperforming the Consumer Discretionary Select Sector SPDR Fund (XLY), which is up a more modest 6.6%. Rival Ford Motor Co.’s (F) stock, however, has outperformed with a nearly 26% increase this year.
Electric-vehicle giant Tesla’s stock, which saw significant weakness for much of the first half of the year, has begun to turn around and is up only 5.5% this year.
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