Seaport says GM is a leader in China, trucks and autonomous cars. Initiates coverage as a buy with $48 price target

  • Seaport Global initiated GM with a "buy" recommendation at a $48 price target.
  • The automaker is undertaking a massive plan to restructure its businesses.
  • GM is well positioned to take advantage of the growth in light truck sales.
Chevrolet Tahoe sports utility vehicles (SUV) wait for final inspection before being driven off the production line at the General Motors Co. (GM) assembly plant in Arlington, Texas.
Matthew Busch | Bloomberg | Getty Images
Chevrolet Tahoe sports utility vehicles (SUV) wait for final inspection before being driven off the production line at the General Motors Co. (GM) assembly plant in Arlington, Texas.

Seaport Global initiated coverage on General Motors Wednesday as a buy with a price target of $48, citing the automaker's recent restructuring efforts and its leadership in China, self-driving car technology and the growing light truck segment.

The news comes one day after Reuters reported that GM and Amazon are in talks to invest in electric pickup truck maker Rivian Automotive.

GM's 2018 profit margin was the fourth highest on record, despite the adverse impact from the changeover to new pickup trucks, Ward said in the note.

The automaker is currently undertaking a plan to restructure its businesses, which GM said should save it several billion in costs and lowered capital expenditures by 2020. The plans include about 14,000 job cuts.

"Unlike the past, GM is not waiting for a downturn to implement cost efficiencies," Ward said.

GM is a leader in self-driving car technology, he said. Its Cruise Automation unit received investments from both Japanese conglomerate SoftBank and Japanese automaker Honda in 2018. These bets place Cruise's value at roughly $15 billion. The unit could be spun off within a year or two, Ward said.

In the short term, the largest U.S. automaker is also particularly well positioned to take advantage of growth in sales of light trucks, Ward said.

Light trucks pulled in just over 69 percent of the total U.S. light vehicle market in 2018, up from nearly 57 percent in 2015. Trucks, which include the high-growth SUV and crossover segments, often command higher transaction prices than comparably-sized cars, which often yields higher profits for automakers. On average, buyers spend $12,000 more on a truck than they do on a car.

The "Detroit 3" automakers GM, Ford, and Fiat Chrysler control about 53 percent of the light truck segments, more than twice as much of their collective 21 percent share of the car sector.