General Motors (GM) Lawsuit Generates Upside Possibility - JPMorgan

JPMorgan analyst Ryan Brinkman reiterated an Overweight rating and $47.00 price target on General Motors (NYSE: GM) after the company filed a lawsuit in federal court alleging billions of dollars of damage stemming from a nearly decade long bribery and corruption scheme purportedly orchestrated by the highest levels of Fiat Chrysler Automobiles (FCA), including primarily its late CEO Sergio Marchionne.

The suit alleges that FCA paid millions of dollars in illegal bribes in order to secure “benefits, concessions, and advantages for FCA in the negotiation, implementation, and administration of the collective bargaining agreements between FCA and the UAW. GM states it was denied any such corresponding benefit, leading to materially higher than FCA labor costs. Additionally, GM alleges FCA bribed the UAW into being chosen as the lead or target firm for the 2015 round of Collective Bargaining Agreement (CBA) negotiations and that FCA then used its corruptly obtained position as target to craft an agreement which cost GM, via pattern bargaining, over $1 billion more than had GM been chosen as the target.

The analyst is not changing numbers but sees upside opportunity stating "Given current uncertainty regarding the validity of GM’s allegations, the uncertainty regarding the timing of any proceeds, or if such proceeds would be reduced upon settlement, we are for now not accounting for potential lawsuit proceeds separately in our valuation analysis (as such, our December 2020 price target remains $47) but we believe this development represents risk to the upside".

For an analyst ratings summary and ratings history on General Motors click here. For more ratings news on General Motors click here.

Shares of General Motors closed at $35.28 yesterday.

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