MORGAN STANLEY: GM's 'unique' structure makes it our top auto pick

Just a week after saying General Motors needed a “cultural revolution” to keep up with changes sweeping the auto industry, Morgan Stanley has raised its price target for the stock, citing investment in automation and ride sharing.

GM has made some productive moves and has an opportunity to unlock hidden strategic value,” analyst Adam Jonas said in a note raising the bank’s price target for GM shares to $US43 from $US40.

“We mark to market our sum-of-the-parts model and move the stock up to #3 in our ranking. GM is now our highest-ranked OEM in US autos.”

Specifically, autonomous driving and ride sharing both added $US0.5 billion each to the bank’s value assessment.

“Consistent feedback from our sources in the autonomous start-up community suggest GM bought a strong asset with Cruise,” a San Francisco-based self-driving startup that GM acquired for more than $US1 billion last year, the bank said.

Lyft, in which GM bought a $US500 million stake last January, “continues to make good progress both commercially and strategically,” the bank said.

Automakers have reported declining sales for four months in a row now, and Wall Street is concerned that the US auto industry could be entering a downturn. GM, in contrast, beat expectations last quarter, despite falling revenues.

“We believe GM’s shareholder structure (its lack of a government, family or strategic blocking minority) is unique among the global auto industry,” Morgan Stanley said.

Shares of GM are up 22.55% over the last 12 months.

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