Car manufacturers have a good spell currently. Barclays analyst Brian Johnson believes that car prices will continue rising, giving General Motors (NYSE: GM) and Ford Motor (NYSE: F) shares an extra boost.
Barclays analyst raises Ford and GM price targets
According to Wall Street, car sales have rebounded, and there is strong pricing which implies that the stock price of car manufacturers could continue in an upward trend. The current high prices result from robust car demand during the pandemic and the production shutdowns due to COVID-19, which affected supply issues. As a result, car prices in the US have been on the rise this past year.
In a note to clients, Johnson weighed in on these positive trends by hiking price targets for GM and Ford. The note said, “Mid-month pricing data indicate stronger-than-expected pricing for both Ford and GM. Indeed, mid-month data show a step-up in average transaction prices and a step-down in incentive spending.”
On Tuesday, the analyst increased Ford’s price target from $15 to $17 and boosted his GM call from $70 to $74. The new price targets are around 15% and 25%, respectively, from where Ford and GM closed on Monday. . This year, both stocks have performed exceptionally, and year-to-date GM shares are up 42%, while Ford has surged 68%.
The price of pickup trucks increased by $2,500 MoM
Car pricing has been better than expected through mid-June. Johnson wrote, “Indeed, mid-month data show a step-up in average transaction prices and a step-down in incentive spending.” According to Barclays, pickup truck prices increased $2,500 month over month in June.
Higher prices for new cars are good for car manufacturers and those selling used cars because their worth will increase. Equally, financing units of both automakers will benefit since residual values of vehicles coming off lease will be higher.