General Motors shares could climb up by as much as 35 percent if it prospers in selling its European Opel brand and concentrates on its much healthier markets, Barron’s stated on Sunday.
Last week, General Motors confirmed reports that it remained in talks to sell its Opel company to Paris-based PSA Group, which produces brands including Peugeot.
If the deal goes through, it might net GM as much as $1 billion in money, Barron’s states, citing experts. Although, the genuine worth from the sale would originate from unloading a money-losing company and refocusing on operations in China, Latin America and North America, it stated.
In 2016, GM reported a $257 million operating loss from its Opel unit. Removing Opel could gain GM almost $1 billion in extra annual capital, on top of the instant profits from the deal, Barron’s stated.
It also said that financiers might reward GM’s stock due to the fact that the sale would show a determination by CEO Mary Barra to concentrate on value-generating company.
Barron’s included that, although GM is a cyclical stock and a decline in vehicle sales is widely expected in the near future, its trough revenues per share will be much better than many investors anticipate, possibly around $3 to $4.