UBS upgraded its rating on General Motors (GM) on Wednesday, raising the stock to buy from neutral and increasing its price target to $81 from $56.
The stock gained over 2% after the upgrade.
The new target is nearly 40% above Tuesday’s closing price, reflecting UBS’s view that GM can navigate tariff costs while maintaining strong financial performance.
UBS sees tariff headwinds as manageable
Analyst Joseph Spak highlighted that although tariffs have added costs that GM has not passed on to consumers, the automaker has multiple levers to mitigate the impact.
“Combined with a strong free cash flow profile, a capital allocation policy that could support buying back shares, and an inexpensive valuation, we see a positive setup for the shares,” Spak wrote.
GM recently reported that tariffs lowered margins by about 3% last quarter.
UBS believes the company can offset this through anticipated tariff relief from the Trump administration for Mexico and South Korea.
Additionally, relaxed emission standards are expected to reduce regulatory credit expenses, further supporting profitability.
The firm also pointed out that lower interest rates could improve financing conditions for new car buyers, potentially boosting sales.
Overall, UBS is more optimistic on GM than most of Wall Street, noting that its earnings estimates for the next two years are materially higher than consensus forecasts.
Stock Performance and Valuation
GM shares rose 2.2% to $59.91 following UBS’s upgrade, in a market that was otherwise relatively flat.
The stock has underperformed the broader market for much of the year due to uncertainty surrounding US trade policy, particularly under the Trump administration.
However, GM has rebounded recently, gaining 21% this quarter and 12% year-to-date.
The stock trades at a price-to-earnings ratio of 6 based on forward earnings estimates, near the lower end of its historical 5-to-8 P/E range, according to UBS.
This suggests to the bank that GM shares remain undervalued relative to historical norms, especially given the company’s strong cash flow and potential for shareholder-friendly capital allocation.
Outlook and market implications
UBS’s positive assessment emphasizes GM’s ability to manage external pressures while capitalizing on potential regulatory and trade relief.
The bank sees multiple factors supporting the stock, including tariff reductions, lower emissions-related costs, and favorable financing conditions for consumers.
The upgrade may signal renewed investor confidence in the automaker, particularly for those focused on valuation and long-term cash flow stability.
UBS’s report underscores that, while trade and regulatory challenges persist, GM has structural and operational strengths that could support stock performance over the medium term.
Investors will likely monitor the company’s execution on cost management, regulatory developments, and any shifts in US trade policy, all of which remain key drivers for both margins and overall market sentiment toward GM shares.
This post General Motors shares surge 2% after UBS upgrade, sees stock as undervalued may be modified as updates unfold
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