Why This General Motors Analyst Says It's Time To Buy The Dip In GM Stock

General Motors Company (NYSE: GM) shares dropped 4% on Thursday after the company announced it will be idling production at its Fort Wayne plant for two weeks in late March.

On Friday, one analyst said the sell-off is a buying opportunity for investors.

The Analyst: Bank of America analyst John Murphy reiterated his Buy rating and $70 price target for GM.

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The Thesis: In a new note on Friday, Murphy said GM's plan to cut truck production was a positive sign the company was prioritizing production and price discipline.

"We are encouraged by the news as it supports our thesis that the automakers will be more disciplined on production as they focus more on pricing and profits," Murphy said.

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Murphy estimated the Indiana plant produced more than 1,300 full-sized trucks per day with an incremental margin of between $15,000 and $30,000 per vehicle. He projected the two-week idling would reduce GM's full-year EPS by between 10 cents and 20 cents, or between 1.6% and 3.2%.

Looking ahead, Murphy said GM remained a leader in the auto industry's transition to an electric and autonomous future. He said GM's investment in next-generation technology would continue to create value for investors in the long term.

General Motors shares gained 15.3% year-to-date in 2023, outpacing the 1.8% gain by top competitor Ford Motor Co (NYSE: F) but lagging the 58.5% gain of EV leader Tesla Inc (NASDAQ: TSLA).

Benzinga's Take: Auto industry demand may be elevated somewhat in 2023 after chip shortages constrained supply in 2022. In January, GM guided for a 2023 net income of between $8.7 billion and $10.1 billion.