UBS Raises General Motors Price Target on Margin Recovery and Cash Returns

Core Viewpoint - UBS has raised its price target for General Motors (GM) to $97 from $85 while maintaining a Buy rating, positioning GM as its top pick in the auto sector heading into 2026 [1] Group 1: Financial Projections - UBS forecasts GM North America margins to approach 8% in 2026, exceeding consensus expectations of around 7%, supporting an earnings per share (EPS) estimate of $13.68, which is approximately 15% above consensus [2] - For 2027, UBS projects GM North America margins near 9%, compared to consensus estimates of around 8%, leading to a projected EPS of $16.20, roughly 21% above consensus [3] Group 2: Market Position and Regulatory Environment - The U.S. is viewed as the most favorable auto market in the coming years, particularly for domestic truck manufacturers, with GM well-positioned to benefit from a more relaxed regulatory environment regarding emissions and fuel economy [3] - Regulatory changes could lower compliance costs, mitigate losses from electric vehicle sales, and allow for a more profitable mix of higher-margin trucks and SUVs, with significant benefits expected in 2027 and beyond [4] Group 3: Shareholder Returns and Cash Position - UBS models GM repurchasing approximately 8% of its shares in 2026 while maintaining a cash balance of $24.5 billion, exceeding its minimum target of $18 billion to $20 billion, allowing for potential shareholder returns, including a possible dividend increase [5] - There is upside risk if upcoming USMCA renegotiations yield a more favorable tariff outcome for Mexico and Canada [5]