The Zacks Analyst Blog Highlights: General Motors, Tesla Motors, Volkswagen, Toyota Motor and Daimler

Jan 27, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 27, 2014 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the General Motors Company (NYSE: GM-Free Report), Tesla Motors, Inc. (Nasdaq:TSLA-Free Report), Volkswagen AG (OTC:VLKAY-Free Report), Toyota Motor Corp. (NYSE: TM-Free Report) and Daimler AG (OTC:DDAIF-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday's Analyst Blog:

GM Downed to Strong Sell

On Jan 23, 2014, Zacks Investment Research downgraded General Motors Company (NYSE: GM-Free Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Many analysts covering General Motors revised their earnings estimates for 2014 downward in the last 60 days. This resulted in a 5% decline in the Zacks Consensus Estimate to $4.42 per share.

General Motors recorded adjusted earnings of $1.6 billion or 96 cents per share in the third quarter of the year, beating the Zacks Consensus Estimate of 91 cents per share. Including a net loss of $0.9 billion or 51 cents per share from special items in the reported quarter, net income (on a reported basis) amounted to $0.7 billion or 45 cents per share, compared with $1.5 billion or 89 cents per share in the year-ago quarter.

Results of the International Operations segment was disappointing. It reported a 6.8% decline in revenues to $5.3 billion. Adjusted earnings before interest and taxes (EBIT) plunged 62.5% to $0.3 billion from $0.8 billion recorded in the comparable quarter of 2012.

Tesla Prices Model S in China

Tesla Motors, Inc.'s (Nasdaq:TSLA-Free Report) Model S electric sedan has been priced at 734,000 CNY ($121,370) in China. The price has been fixed by adding the costs of shipping, VAT and import duties to the U.S. price.

This makes Model S one of the low-priced vehicles in the Chinese auto market. However, Tesla is concerned that a low price may adversely affect sales as customers often equate quality with price.

High-end cars are expensive in China compared to the western countries. The higher price is due to import taxes and the foreign vehicle tag. As a result, foreign automakers earn almost two-fold profits in China as against in Europe or the U.S. However, Tesla does not want to differentiate between customers in China and those in other countries.

China is one of the biggest auto markets in the world in terms of number of vehicles sold. Global automakers intend to capitalize on the increasing sales in the region. Some of the automakers have also set up production units in China to navigate the high import duties. In Dec 2013, Renault opened its first factory in China.

However, electric car producers, including Tesla, are not interested in setting up production units in China. The Chinese government demands technology sharing with the local partners for the vehicles to be considered as domestically produced vehicles. This may adversely affect the company in the long run.

Model S is integrated with a premium 85 kilowatt hour battery pack, which enhances its competitive position against Volkswagen AG's (OTC:VLKAY-Free Report) Audi S5 sedan and Bayerische Motoren Werke AG's 5-series GT sedan. Tesla expects that Model S shipments to China will be same as the U.S. sales volume by 2015.

Tesla designs and manufactures electric vehicles and electric vehicle powertrain components for partners including Toyota Motor Corp. (NYSE: TM-Free Report) and Daimler AG (OTC:DDAIF-Free Report). The company currently carries a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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