The Stock of General Motors Rises More Than 2% After Mizuho Upgrades It to Buy Now That the UAW Strike Has Ended

Shares of General Motors Co. experienced a notable uptick of over 2% on Monday following an upgrade by Mizuho analysts who shifted their stance on the stock from neutral to buy. This positive adjustment was underpinned by the analysts' assertion that General Motors is poised for an upward trajectory, particularly now that the United Auto Workers strike has concluded.

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According to Mizuho, General Motors' anticipated expenses related to wage increases, amounting to approximately $1.5 billion in 2024, are expected to be completely mitigated by planned cost-cutting measures totaling around $2 billion. Furthermore, the analysts highlighted the company's strategic emphasis on profitability in its revitalized electric-vehicle approach.

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Notably, General Motors has opted to temporarily halt investments in its Cruise self-driving business, a move that aligns with its commitment to fiscal prudence.

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Looking ahead, Mizuho predicts that General Motors will showcase improved production metrics in the coming year, unmarred by the disruptions caused by strikes. The analysts also pointed out that the company's ambitious $10 billion share buyback program will account for approximately 10% of outstanding shares over the next 12 months.

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Central to General Motors' promising outlook, according to Mizuho, is its robust and diverse portfolio with a focus on SUVs and pickups. The analysts underscored the company's position as having the most extensive portfolio in North America, encompassing a comprehensive range of SUVs, pickups, commercial vehicles, vans, and electric vehicles. This strategic diversity is particularly aimed at capturing the growing market for SUVs and pickup trucks in North America.

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Mizuho further expressed confidence in General Motors by raising their stock-price target from $38 to $42, reflecting an estimated upside of around 27% based on Monday's prices. Despite a 1.8% decline in the stock's performance year-to-date, Mizuho's optimistic outlook contrasts with the broader market trend, as the S&P 500 has recorded an 18% gain over the same period.

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In summary, Mizuho's upgraded rating and positive outlook on General Motors underscore the belief that the company is well-positioned for growth and recovery following the resolution of the labor strike. The analysts highlighted key factors such as effective cost management, a revamped electric-vehicle strategy, and a strong product portfolio as instrumental in driving General Motors toward a more prosperous future.