Is General Motors Stock Going To $53? One Wall Street analyst thinks so.

It’s been a year since the United Auto Workers went on strike, affecting the three major US automakers. Since that work stoppage ended on October 30, the stock of General Motors (GM -1.72%) increased by almost 75%.

That’s the right level for GM stock right now, according to Bernstein analyst Daniel Roeska. In a new report, Roeska cut his rating on the stock from a buy to a hold and cut his firm’s price target to $53 a share. Shares fell on the news, even with shares hovering around 10% below the new price target.

Will EVs Help or Hurt GM?

The rally in GM stock over the past year came as the company raised its 2024 estimates for earnings per share and cash flow. The company used that excess cash flow to return capital to shareholders by buying back shares and increasing its dividend payout.

These share buybacks reduced the share count by 18% year-over-year, giving shareholders a larger share of the company. GM also recently announced a new $6 billion share repurchase authorization.

But Roeska also sees some clouds on the horizon. Rising new vehicle inventories and pricing pressure from strong competition could affect results. The company is spending capital to grow its electric vehicle (EV) lineup amid slowing EV sales growth.

GM just announced that it will temporarily lay off 1,700 workers at its Kansas plant while it repurposes the building to prepare for the production of its new Chevrolet Bolt EV. It remains to be seen whether the company’s bet on electric vehicles will pay off. Unlike the rival I seeGM doesn’t have that much diversity in commercial vehicles or hybrids to balance out any softness in EV demand.

Roeska’s demotion makes sense after the big gain in GM stock this year. Even selling shares would make sense for some. Long-term investors who focus on income can get a much higher dividend yield from Ford stock.