RBC Sees More Upside for Car Stocks Ford and General Motors

Call buying has been extremely popular on Ford lately

Dec 19, 2017 at 10:16 AM
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It's been a good second half of the year for automakers Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM). Respectively, the stocks sport year-to-date gains of 4.4% and 22%, with the latter hitting a record peak of $46.76 in late October. Brokerage firm RBC expects this trend to continue, weighing in bullishly on both F and GM this morning.

RBC Bumps Up Ford Stock Price Target

Ford stock was last seen trading at $12.74, up 0.6% for the day, after RBC analysts upped their price target to $14 from $13. Most other brokerage firms are still bearish on the shares, though. Of the 16 covering the equity, just two say it's worth buying. Also, F shares are now trading above their average 12-month price target of $12.56. So, an extended uptrend from the security could result in more bullish attention.

As for options activity, sentiment has been quite bullish on the auto stock. Ford has a 10-day call/put volume ratio of 3.38 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This not only shows call buying has more than tripled put buying, the ratio ranks in the bullish 89th annual percentile. 

Analyst Expects Another Big Year From General Motors

RBC upgraded GM stock to "outperform" from "sector perform," and lifted its price target to $52 from $51. The firm's analyst expects another strong fundamental performance from the company in 2018, including a stronger-than-expected rise in profits. Shares of General Motors last checked in at $42.66, gaining 1.2% so far today.

Even though the security is up 22.4% in 2017, the majority of analysts still have "hold" ratings in place. Plus, the Schaeffer's put/call open interest ratio (SOIR) for GM comes in at 1.25, showing that put open interest actually outweighs call open interest among near-term contracts. Moreover, this reading ranks in the 84th annual percentile. It would appear there's plenty of skepticism also surrounding General Motors, suggesting more upside could be in store, from a contrarian perspective.


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