This article was originally published by GuruFocus on April 18, 2014
By Sarfaraz A. Khan. Research Assistant: Gohar Yousuf
The shares of General Motors (GM) have struggled as the company deals with its recall crisis. The auto giant has estimated $1.3 billion as the recall cost, which does not account for its tarnished reputation. Long-term investors, however, might consider this as a buying opportunity.
Although the company’s shares might continue to struggle in the short term, by the end of the year, when the crisis would be history, analysts at JPMorgan believe that the GM could rise to $52 per share, which shows a potential upside of 53% from the current levels.
The company will announce its quarterly results on Thursday. The company has reported strong sales numbers for March and has outperformed its rival Volkswagen AG (VLKAY) in China in the first three months of the current year. Analysts are expecting a 4.2% year-over-year increase in sales to $38.4 billion and a 42% drop in earnings to $0.39 per share, according to data compiled by Thomson Reuters.
Millions Recalled
GM is recalling nearly 2.6 million compact vehicles made between 2003 and 2011 with faulty replacement parts, particularly the ignition switches, which is an internal part of the ignition assembly. The recall mainly covers vehicles between 2003 and 2007, as the company redesigned the part. But the company fears that some of the cars sold between 2007 and 2011 could have been repaired with the old switch.
At least 12 deaths have been linked to the ignition problem, which is linked to the older models. The recall crisis widened this month when .. read full article at GuruFocus
