Key Takeaways
- Wolfe Research elevated GM to Outperform from Peer Perform, establishing a $96 price objective
- Auto sector stocks have declined approximately 8% in the last three weeks amid macroeconomic uncertainties
- Analyst identifies 2027 growth drivers for GM including full-size truck overhaul valued at roughly $1.7B, warranty expense reduction, and tariff relief
- Wolfe projects GM earnings per share at $12.37 for 2026 and $16.03 for 2027
- Ford received caution flag due to possible $1.5B EBIT pressure in 2027 from inventory concerns
Wolfe Research elevated its rating on General Motors to Outperform this Wednesday, establishing a $96 price objective for the automaker. The upgrade marks a shift from the firm’s previous Peer Perform stance.
The timing of this upgrade comes amid widespread weakness across automotive equities over recent weeks. The typical stock in the auto space has shed roughly 8% of its value as broader economic worries have weighed on investor sentiment.
Emmanuel Rosner, the analyst behind the call, noted that automotive stocks “are often among the main targets when macro concerns escalate.” However, he emphasized that historical patterns reveal these selloffs “can also present interesting buying opportunities.”
Following a comprehensive review of production forecasts and commodity price trajectories, Wolfe determined that the “risk/reward profile now appears more attractive for select names.” GM emerged as the firm’s top pick in this group.
The research firm contends that market participants are failing to fully appreciate the magnitude of GM’s potential earnings power as it moves toward 2027. A significant component involves the forthcoming refresh of its full-size pickup truck line, which Wolfe values at approximately $1.7 billion in additional profit.
Warranty expenses are projected to decline materially. Additionally, Wolfe anticipates a lower net impact from tariffs and ongoing progress in reducing electric vehicle losses as supplementary positive factors.
Wolfe’s updated financial model projects GM will deliver earnings of $12.37 per share in 2026, before jumping to $16.03 in 2027. The 2027 projection especially represents where the firm believes Wall Street is significantly undervaluing the company.
BorgWarner and Aptiv Receive Positive Views
Wolfe simultaneously raised BorgWarner to Outperform in its sector analysis. The firm highlighted the company’s “Power Gen opportunity,” estimating it could contribute approximately $2 billion in revenue at full scale.
Rosner indicated that the stock’s recent decline means this growth potential remains unrecognized by the market. From Wolfe’s perspective, the current valuation presents an appealing opportunity.
Regarding Aptiv, Rosner maintained his favorable outlook in advance of the company’s upcoming corporate separation. He characterized the current price level as “a compelling entry point,” emphasizing solid operational fundamentals across both entities that will emerge from the division.
Ford Faces Scrutiny
Not all automakers received positive commentary. Wolfe raised red flags about execution challenges at Ford, specifically highlighting uncertainty around its 2026 production plans.
The firm cautioned that excessive year-end inventory levels could generate a $1.5 billion EBIT headwind extending into 2027. Rosner opted not to upgrade Ford’s rating.
The Wolfe analysis represents a targeted strategy toward the automotive sector rather than blanket optimism. GM’s refreshed pickup portfolio and operational efficiency gains formed the foundation of the upgrade thesis.
Wolfe’s 2027 EPS forecast of $16.03 for GM significantly exceeds current Wall Street consensus estimates, indicating the firm perceives substantial appreciation potential should these positive developments unfold as anticipated.
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