GM Is Becoming a Wall Street Favorite. Here’s Why.

Wall Street is getting more bullish aboutGeneral Motorsstock. The latest example comes from Argus analystBill Selesky, who increased his target price for GM shares from $66 from $62 on Tuesday.

Seleksy is feeling more bullish afterGeneral Motors(ticker: GM) reportedbetter than expectedfirst quarter profits, despite a globalsemiconductor shortagethat is constraining auto production around the globe. “The higher earnings reflected the successful launch of full-size SUVs,” wrote the analyst in a Tuesday report.

He rated shares Buy coming into Tuesday and is still recommending the stock to clients. “Investors have undervalued the company’s strength in traditional internal combustion vehicles, as well as its Chinese [joint venture], Ultium battery, and financial services businesses,” adds Selesky. Ultium is GM’s battery platform being develop as the base for all its coming electric vehicles.

Investors might be skeptical, but Wall Street is not. More than 90% of analysts covering GM stock rate shares Buy. TheaverageBuy-rating ratio for stocks in theS&P 500is roughly 55%.

And bullishness is picking up. A year ago, less than 80% of analysts rated shares Buy. What’s more, the average analystprice targetis up more than 100% over the past year, rising to about $70 a share from less than $33.

The recovery in automotive sales from pandemic-induced lows has certainly helped analyst sentiment, but so have GM management’s actions. GM managed to produce full year profits, despite the Covid-19 recession. And the company continues toaggressively pursueEV technologies. GM plans to launch 30 all-electric vehicles around the globe by 2025. It has some of themost aggressiveEV goals of any traditional auto maker.

Investors are starting to warm to GM stock, too. Shares are up about 36% year to date, better than comparable returns of the S&P andDow Jones Industrial Average.Recent gains leave the company trading for about 10 times estimated 2021 earnings. But those earnings are depressed by the global automotive chip shortage which is costing many auto makers billions in 2021 operating profit.

Shares are trading at less than 9 times estimated 2022 earnings. If GM is a long term winner in EVs like it has been in the light truck segment of the market, shares look like a steal. That’s what analysts believe anyway.

The highest target price on Wall Street is $80 a share from Morgan Stanley analystAdam Jonas. He rates share Buy and calls GM histop pick.