General Motors has an 'underappreciated' growth driver, UBS says
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General Motors ' artificial intelligence and software integrations are "underappreciated," and those digital capabilities could boost the stock, according to UBS. The investment bank has a buy rating on the automotive stock. It raised its price target on shares to $114 from $102, implying 33% upside from Friday's close. "GM's digital capabilities are an underappreciated and undervalued opportunity," analyst Joseph Spak said Monday in a note to clients. "Digital creates a recurring, less cyclical, higher margin revenue stream that is deserving of a multiple higher than 'core' GM … [and a] further Digital [key performance indicator] disclosure or breakout of Digital revenue/profit could help with a re-rating." GM YTD mountain GM year to date GM's total digital revenue could grow to $9.6 billion by 2036 — a figure that represents a tripling in its revenue for that vertical over the next decade, according to UBS. That vertical includes GM's in-vehicle AI assistant services and GM Super Cruise, a subscription hands-free driver assistance system. Spak added that the Chevrolet and Buick maker is already tapping into opportunities beyond vehicle sales. "With a growing percentage of their fleet 'connected,' GM taps into opportunities beyond initial hardware (i.e. vehicle) sale to capitalize on ongoing vehicle ownership and secondary customers," Spak wrote. UBs' call falls in line with consensus on the Street. Of the 29 analysts covering GM, 22 have a buy or strong buy rating on the stock, LSEG data shows. Shares have risen 5% year to date, underperforming the overall market. However, they were flat in early trading Monday while the rest of the market struggled.