GM remains a top pick at Citi ahead of 4Q reporting

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By Michael Elkins

General Motors (NYSE:GM) remains a top pick at Citi Research ahead of 4Q reporting. Mobileye (NASDAQ:MBLY) remains Citi’s Top Supplier Pick, followed by Aptiv (NYSE:APTV). No changes were made to Citi’s prior stock setup views from earlier this week. However, refreshed 2023E supplier EPS estimates are 1%-4% below consensus, GM and Ford (NYSE:F) estimates remain above consensus and Tesla (NASDAQ:TSLA) modestly below.

Citi remains above consensus on GM in a more constructive 2023 view on U.S. SAAR/pricing. Analysts wrote in a note that, while they certainly acknowledge heightened risks, they don't view GM’s net price position to be as vulnerable as consensus believes. They estimate that roughly two-thirds of GM’s price/mix gains since 2019 were driven by Trucks and the underlying Pickup demand strength. Outside of Trucks, GM appears underpriced relative to segment averages, particularly in crossovers. Citi views this as a function of an aging product lineup that’s expected to be refreshed in 2023-24.

Citi updated their Tesla model to reflect recent data points including Q4 deliveries. Citi analysts now estimate 2023 vehicle deliveries to be up 40% YoY (vs. 53% prior). The latest 4Q EPS estimate is slightly ahead of consensus, but 2023 estimates are modestly below.

The Ford model was updated to introduce 1Q-4Q 2023 estimates and a 2025 estimate. 2022-2023 EPS estimates remain unchanged with estimates sitting above consensus on a more favorable view on North America. Citi maintained a $14 price target on the stock.

Shares of GM, F, and TSLA are down 3.63%, 2.90% and 5.90% respectively in pre-market trading on Friday.

MBLY and APTV are down 0.35% and 0.50%.