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GM's businesses can remain relevant: Morgan Stanley

Shares of GM rose nearly 3% on Monday following Morgan Stanley's bullish call on the stock.

Analyst Adam Jonas upgraded the automaker to overweight, and increased his price target to $37 from $29.

The call comes after the heavily-scrutinized industry has been under pressure due to concerns over "peak auto." Some investors worry that the rise of ride-sharing services coupled with declining auto sales means an end to the traditional car makers.


The so-called "traditional" manufacturers -- like GM and Ford -- face additional pressure from high-tech car companies, like Tesla, racing to make the first fully autonomous vehicle.

But Adam Jonas believes these fears are overblown. For one, he argues that the transition to fully autonomous vehicles is further down the road than people might think.

"With all the excitement around fully autonomous transport, we believe investors may be overlooking the steps and the time required to get there," he wrote in his note.


And Jonas believes GM will take advantage of this waiting period to "generate cash, return cash and nurture new businesses with potentially positive terminal values."

On the "Halftime Report" the desk debated the call and whether or not there's a smooth road ahead for the stock.

As GM shareholders, both Jim Lebenthal and Sarat Sethi agree with the call.

Lebenthal notes that even if the auto-bears are correct and we have reached peak auto, GM will continue to make money.

While he likes the stock long-term, he does question if GM will be able to hold its gains on the day.

Lebenthal points out that when the company reported record numbers last quarter the stock moved higher before ultimately reversing course.

Like Lebenthal, Sethi believes this stock is a long-term hold.

"You're at 5X earnings and a 5% dividend yield with a ton of cash flow and new products coming out. This is not the old GM," he argued.


Joe Terranova, on the other hand, believes the stock's move higher today was simply an artificial boost. He believes the surge wasn't tied to investor confidence in the stock, but rather the star power of widely-followed Adam Jonas.

Josh Brown believes there's no upside ahead for this stock -- he believes it is a "value trap." He points to ride-sharing as the culprit that might kill the industry.

"It remains the case that millennials are 30% less likely to have a driver's license than people their age even one generation ago...It's going to eventually add up to fewer cars being sold. That's why these stocks have below-market multiples," he said on the "Halftime Report".

Trader disclosure: On September 19, 2016 the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Halftime Report" were owned by the "Halftime Report" traders:

Jim Lebenthal: Long: AAPL, BA, C, CSCO, DCO, DIS, EEQ, GM, INTC, JCP, KMI, MPC, ORBC, PFE, QCOM,QRVO, SPLS, TIF, TRN, TWX, WGO

Joe Terranova: LongADBE, ALB, BBT, BLK, CTAS, DLTR, DPS, FB, FIS, FXY, ICE, NOC, ORCL, PSX, SHW,SJM, SKY, SLB, SLV, TJX, TMO, TXN, VMC, VRTS, VXX, VZ

Josh Brown: Long AAPL, AMGN, BMY, CORE, DE, DNKN, GE, GOOGL,MA, NVDA, SAM, SHAK, TWTR, XLE, YUM

Sarat Sethi: Long AA,AAL, AAPL, AL, ACN, BWA, CSCO, DAL, DGI, DLPH, F, FB, FBHS, GE, GM, GOOG, HAR,HON, INTC, JWN, LB, M, MAS, MSFT, NVDA, QCOM, SJM, UAL, V, WFM, XPO, YHOO, YUM