Next for GM: New Luxury Pickup, Lower Earnings, Flat Share Price

DETROIT ( TheStreet) -- Expectations are high for GM ( GM) sales but not so high for GM's share price, as the automaker prepares to report April sales Wednesday and first-quarter earnings on Thursday, and to roll out a new luxury pickup truck on Monday.

Like Ford ( F), which beat first-quarter estimates, GM is expected to report strong domestic sales for the first quarter -- and for April -- but also a continuing weak performance in Europe. With shares trading close to a two-year high, some analysts have a hold on the stock.

Shares closed Tuesday at $30.84, up 5 cents, after hitting $30.97, a 52-week-high, in intraday trading. In July 2011, shares hit their two-year high of $32.08. The magic number here, of course, is $33, GM's IPO price in November 2010.

For the first quarter, analysts surveyed by Thomson Reuters estimate GM will earn 54 cents a share, down from 93 cents in the same quarter a year earlier, when GM beat estimates on strong U.S. and China sales and lost just $300 million in Europe, which is the type of number that is coming to represent the good old days in Europe, where staggering auto industry losses are continuing.

Both S&P Capital IQ analyst Efraim Levy and Jefferies analyst Peter Nesvold have holds on the shares.

"We see GM benefiting from the expanded U.S. and global vehicle demand that we project (and) "the repurchase of 200 million GM shares from the Treasury should be accretive to 2013 EPS," Levy wrote in a recent report. However, he said, "European results should lag (and) despite an improved balance sheet, GM faces claims on its cash for items such as unfunded pension obligations." He has a $31 price target.

Nesvold, meanwhile, wrote recently that with auto industry shares generally up and European sales at levels last seen in 1996, "the auto stocks increasingly feel toppy to us.

"The challenge with these names is that, if you get off them too early and the markets continue to rally, you'll be left behind," Nesvold said. "But it's starting to feel like the group is due for a correction. As a result, the next major decision in the group will likely be trying to figure when to return to neutral." He has a $29 price target.

Citibank analyst Itay Michaeli wrote on April 10 that "we're bullish on Ford and GM, but don't see a glaring trading opportunity into Q1 ... A trading catalyst will require both stable EU outlooks and management confidence on mid-decade."

As for April domestic sales, forecasts GM will gain about 12%, ahead of the overall industry gain of 10.4%. Overall, the firm expects April light-vehicle sales of 1.3 million units, the best April sales total since 2007. "Sales are almost back to pre-recession levels, so as long as automakers keep reporting their best sales in at least five years, we'll continue to be in good shape," said Edmunds analyst Jessica Caldwell, in a prepared statement.

Edmunds projects Ford sales will gain 16% and Chrysler will gain 11%, with Nissan ( NSANY) up 30%, Honda ( HMC) up 9% and Toyota ( TM) up 3%. The firm predicts GM's market share will be up 0.2% to 18.2%, with Ford up 0.8% to 15.2% and Toyota down 1% to 14%. Of the top eight manufacturers, only Hyundai is expected to show a sales decline.

Continuing strong industry sales prompted LMC Automotive to raise its 2013 light-vehicle sales forecast to 15.4 million from 15.3 million. "The irrepressible buying behavior of consumers is driving auto sales growth in 2013, as consumer spending remains remarkably stronger than the economy suggests it should be," said LMC analyst Jeff Schuster in a prepared statement.

Long-term, the outlook for GM seems promising due not only to consistently rising auto sales but also to the impending rollouts of a series of new models including the 2014 Silverado High Country, a luxury pickup truck, part of the 2014 Silverado rollout. On Monday, GM launched production of the new truck, which expected to begin arriving at dealers during the current quarter.

"We're on a pace to introduce new models over the next three years at double the rate of the past three years," said GM spokesman James Cain. "That's taken from us having one of the oldest product portfolios in the U.S. to having one of the newest."

-- Written by Ted Reed in Charlotte, N.C.

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