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April 7, 2020, 3:33 p.m. EDT

A GM dividend cut 'inevitable,' analyst says

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By Claudia Assis

Analyst Garrett Nelson at CFRA on Tuesday downgraded General Motors Co. /zigman2/quotes/205226835/composite GM +5.47% stock to sell, saying that he expects the company to cut its dividend and that a recent share rebound does not factor in all the headwinds from the COVID-19 pandemic. Nelson also cut his 12-month price target on the shares by $5 to $15 and his 2020 adjusted per-share profit estimate by 80 cents to $2.20 and 2021 adjusted EPS estimates by $1.05 to $3.20. The company's stock has outperformed other U.S. car makers, but that is "unjustified," and a dividend cut is "inevitable," Nelson said. "With GM shares having bounced approximately 50% since hitting a multiyear low on March 18, we lower our recommendation to sell, as shares do not appear to be reflecting the magnitude of the forthcoming drop in auto sales and the possibility of a liquidity crunch," he said. Shares of GM have lost 45% in the last 12 months, compared with losses around 8% for the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.23% in the same period.

/zigman2/quotes/205226835/composite
US : U.S.: NYSE
$ 27.40
+1.42 +5.47%
Volume: 18.87M
May 26, 2020 4:00p
P/E Ratio
8.38
Dividend Yield
0.00%
Market Cap
$39.21 billion
Rev. per Employee
$849,994
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/zigman2/quotes/210599714/realtime
US : S&P US
2,991.77
+36.32 +1.23%
Volume: 3.36B
May 26, 2020 5:20p
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