Shares of General Motors (GM) are slipping after Morgan Stanley analyst Adam Jonas downgraded the stock to Equal Weight on valuation as he believes investor expectations about the company's progress in next-generation automotive technologies may have gotten a "bit ahead of themselves." Meanwhile, his peer at Citi raised his price target on the shares on potential upside ahead. This follows two upgrades earlier this month to buy-equivalent ratings.

MOVING TO THE SIDELINES: In a research note to investors this morning, Morgan Stanley's Jonas downgraded General Motors to Equal Weight from Overweight following the stock's 40% rise over the past year, which he attributes to investors having "finally noticed" the company's "bold and difficult moves" to reposition the core business for a longer duration of success. However, the analyst argued that his thesis that General Motors could change the narrative and drive its share price higher has played out, and investor expectations may have gotten "a bit ahead of themselves." Following discussions with a wide group of investors, Jonas pointed out that the consensus seems to be that the company is "substantially" ahead of the competition in the arena of fully autonomous transportation and expectations are also high on General Motor's ability and willingness to unlock hidden value of such a business through strategic action. Moreover, he noted that market expectations for the value of such a move is "well in to the many tens of billions of dollars," which greatly exceeds his estimates of $1B-$2B. While acknowledging that General Motors is still a "relatively inexpensive" stock, the analyst said he believes that its valuation is relatively fully valued when considering the point in the auto cycle and the valuations of other global auto peers. Furthermore, Jonas also highlighted the execution risk of a "highly ambitious" autonomous strategy.

CITI SEES MORE MULTIPLE EXPANSION: Meanwhile, his peer at Citi voiced a more bullish opinion on General Motors. Analyst Itay Michaeli raised his price target for General Motors to $60 from $53 saying the company's "resilient" third quarter report "bolsters the case for further multiple expansion." Further, the analyst argued that the upcoming Investor Day should serve as a key opportunity for management to reframe the entire story and unlock a narrative - namely the RoboTaxi AVs and the company's pickup truck core - that could support a long-term potential upside path to $134 per share. He reiterated a Buy rating on the shares.

BUY GENERAL MOTORS: Earlier this month two other research firms upgraded General Motors to buy-equivalent ratings. On October 13, Barclays analyst Brian Johnson upgraded the stock to Overweight from Equal Weight and raised his price target on the shares to $55 from $41. The analyst told investors that the automaker is set to recoup lost market capitalization from Tesla (TSLA), and expects the investor narrative to shift toward his view that General Motors may not be the "'dinosaur' that its low multiple would imply." This followed an upgraded to Buy at Bank of America Merrill Lynch, with analyst John Murphy saying GM has been pursuing expansion opportunities at an accelerating pace while maintaining its core truck and global auto business. Murphy noted at the time that the automaker has a first move advantage with its ability to integrate an autonomous electric vehicle into a ride hailing fleet and/or shared fleet enveloped with OnStar. This would allow General Motors to defend its current market share as the company pushes into creating a more valuable mobility product for consumers that will ultimately drive shareholder value, the analyst contended.

PRICE ACTION: In morning trading, shares of General Motors have dropped 2.5% to $45.29. Year-to-date, GM shares are up about 30%.