General Motors shares rose after RBC Capital Markets upgraded the stock to outperform on Tuesday.

“We believe GM guides 2018 above consensus leading to positive earnings revisions,” wrote analyst Joseph Spak. “The stock fits squarely into our preferred narrative for 2018 – increased confidence on downturn resiliency with a seat at the table on new mobility.”

His new price target of $52 calls for the stock to pop 23 percent over the next 12 months as North American truck sales decline less than the rest of Wall Street expects.

The analyst revised his 2018 earnings per share estimate to $6.30, approximately 8 percent above consensus, according to FactSet.

Shares of GM were up 1.23 percent in premarket trading Tuesday, set to add to a 21 percent gain this year.

But while Spak’s primary reason for upgrading shares stemmed from his belief in healthier truck production and a more resilient company, the analyst did note that General Motors could be a player in the budding robo-taxi industry. The company is investing heavily in autonomous vehicle technology, a potentially “game changing paradigm shift” for GM.

“We believe autonomous will first permeate in urban areas where the cost/mile is very high which is likely why GM is testing in those locations. Interestingly, GM is typically under-represented in urban areas so the cannibalization of itself is lower and shared autonomous looks to be an incremental opportunity for GM,” wrote Spak. “Only time will tell whether we and/or GM are right on the opportunity. But from a stock perspective, because GM has a seat at the table, we see an opportunity for new investors.”

In the company’s recent earnings call, CEO Mary Barra touched upon efforts to expand autonomous technology in production, including the company’s new ride-sharing platform known as Cruise.

“What we’ve talked about is it will be, first of all, will be gated by safety, so being able to take the driver out will – we have our metrics we defined to look at that and when we’ll be ready to do that, but we think that’s in quarters, not years,” explained Barra. “We’re exploring many options and we could partner with someone, partner with many or work on our own the Cruise application that is being used with our employees.”

—CNBC’s Michael Bloom contributed to this report.

Source: Tech CNBC
GM shares rise after RBC says 2018 earnings will top expectations, upgrades stock