UBS raised its price target on General Motors (NYSE:GM) to $97 from $85 while maintaining a Buy rating, reiterating the automaker as its top pick in the auto sector heading into 2026.

UBS remained positive on GM and rolled its valuation forward to 2027, citing several catalysts that could drive the stock higher. UBS expected GM North America margins to return to the 8% to 10% range, potentially as early as 2026, with the possibility of exceeding pre-tariff levels depending on macroeconomic conditions.

UBS forecast 2026 GM North America margins approaching 8%, compared with consensus expectations near 7%, supporting a 2026 earnings per share estimate of $13.68, about 15% above consensus. While UBS acknowledged GM could initially guide conservatively, it expected positive earnings revisions to emerge throughout 2026.

For 2027, UBS projected GM North America margins near 9%, versus consensus estimates around 8%, driving 2027 EPS of $16.20, roughly 21% above consensus. The firm viewed the U.S. as the most favorable auto market in the coming years, particularly for domestic truck manufacturers, and said GM was well positioned to benefit from a more relaxed U.S. regulatory environment around emissions and fuel economy.

UBS said regulatory changes could reduce compliance costs, limit losses from electric vehicle sales, allow restructuring of the EV footprint, and enable a richer mix of higher-margin trucks and SUVs, with greater benefits likely emerging in 2027 and beyond. GM's valuation of roughly 7x next-twelve-month earnings was described as reasonable, with strong cash generation and an ongoing commitment to returning excess capital.

The firm modeled GM repurchasing approximately 8% of its shares in 2026 while still ending the year with $24.5 billion in cash, above its stated minimum of $18 billion to $20 billion, leaving room for additional shareholder returns, including a potential dividend increase. UBS also flagged upside risk if upcoming USMCA renegotiations resulted in a more favorable tariff outcome for Mexico and Canada.