With third-quarter results and the United Auto Workers strike in the rear-view mirror, US automakers are in a better position than many may think, analysts at Bank of America believe.
“3Q results were mostly better than our expectations, as volumes came in stronger across geographies. Despite this, stock reactions skewed negatively with more volatility and dispersion compared to 2Q,” BofA analysts wrote in a note to clients.
To that point, the share prices of General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) have each declined since their earnings were released in October.
“The UAW strike, one of the big themes entering the quarter, was not as disruptive as initially feared, although concerns about higher labor costs remain,” they added.
Labor costs are one reason many investors are uninspired by the big three automakers’ electric vehicle ambitions, though BofA is optimistic in the long term.
“Despite underwhelming signals from the EV market and broader macro risks, demand for light vehicles remains robust,” analysts noted. “This supports our thesis that we are at the beginning of a capital goods replacement cycle for autos.”
They continued, “GM delivered a strong 3Q despite downtime at some of its key plants. Ford results were choppy, as Model e remains deeply unprofitable and Pro volumes were softer amidst supply chain constraints.”
Shares of Ford and Stellantis NV (NYSE:STLA, EPA:STLA) rose 0.3% Tuesday afternoon, while GM stock gained 1.3%.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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