General Motors Gets 'Strong Buy' Rating! Wall Street Highlights Caesars Entertainment, Cognizant Among 4 US Stocks

The US earnings season continues, with several brokerages recently releasing research reports on General Motors (GM-US), Lithia Automotive (LAD-US), Cognizant Technology (CTSH-US), Sirius XM Holdings (SIRI-US), and Caesars Entertainment (CZR-US), reflecting diverse market views on traditional industry transformation and merger-related themes.

According to Barron's, investment bank Tigress Financial Partners has reiterated its 'Strong Buy' rating on General Motors and raised its 12-month price target to $130.

The firm believes that with the rollout of new vehicle models, AI-driven operational efficiencies, and business opportunities in software and defense, General Motors is transitioning into a high-margin investment opportunity with multiple growth drivers.

General Motors' Q2 earnings show that its core truck and SUV business is integrating with rapidly expanding software, defense, and insurance operations, forming multiple profit growth engines. With EV-related expenses largely behind it, the company has room for valuation upside and sustained shareholder value creation.

Notably, GM is collaborating with OnStar, Super Cruise, Gemini, and NVIDIA (NVDA-US) to build a software and AI business worth $1 billion across one billion miles of data, potentially reshaping the company's margin and growth narrative.

At the same time, GM's defense division is actively developing a defense business expected to reach $1 billion in scale with over 30% annual growth, adding a high-margin, recession-resistant advantage to GM's core investment thesis.

Additionally, GM's capital allocation strategy focuses on continuous reinvestment, reshoring manufacturing to the US, and accelerating shareholder returns.

Lithia Automotive: Strong Earnings Driven by Cost Management

Research firm Seaport Research Partners maintains a 'Buy' rating on Lithia Automotive with a price target of $390.

The company reported adjusted EPS of $10.03 for Q2, exceeding the market expectation range of $8.70–$8.73.

The report analyzes that Lithia's performance this quarter was broadly above expectations, driven by solid results across all business lines, particularly improvements in used vehicle gross margins and the ratio of selling, general, and administrative (SG&A) expenses to gross profit.

Revenue was roughly in line with expectations, with used vehicle prices up over 4.3% year-on-year, fully offsetting slightly lower-than-expected sales volumes (and related finance and insurance business).

In terms of profitability, all business segments delivered gross margins above expectations. New vehicle gross profit was nearly flat compared to the prior quarter, indicating a return to market normalization; used vehicle gross margins increased by over $339 per unit from the previous quarter; service and parts gross margins improved by over 160 basis points year-on-year.

Lithia's dedicated financial services arm, Driveway Finance, achieved a record-high profit of $37 million, a record-high loan volume of $884 million, and a penetration rate of 17.5%.

However, the biggest driver behind Lithia's better-than-expected earnings was stronger-than-expected SG&A expense performance.

On an adjusted basis, SG&A expenses as a percentage of gross profit were 68.6%, a 290-basis-point improvement from the prior quarter. This single factor alone boosted EPS by over $1 compared to Seaport's original estimate.

Cognizant Technology: Financial Services Drive Growth, but Communications Segment Weighs on Valuation

Susquehanna Securities maintains a 'Positive' rating on Cognizant Technology but lowered its price target to $82.

Benefiting from 12% growth in banking and financial services, Cognizant's reported results slightly exceeded expectations.

Additionally, the company's booking performance was solid, securing seven large contracts (including one mega-contract), with a bookings-to-revenue ratio of 1.3x over the past 12 months.

Analysts believe the company's outlook for Q3 and Q4 is relatively conservative and credible, with management demonstrating better-than-expected visibility into Q4.

Susquehanna is optimistic about Cognizant's banking, financial, and healthcare businesses—especially the TriZetto healthcare administration solution—but notes that the communications segment within the communications, media, and technology division remains relatively weak.

Nonetheless, considering current valuation multiples remain reasonable and the business portfolio holds a leading position, the firm decided to maintain a positive rating, only modestly lowering the price target due to peer valuation convergence.

Sirius XM Holdings: Stock Momentum Driven by Spectrum Potential, Not Operational Strength

Benchmark Equity Research maintains a 'Buy' rating on Sirius XM Holdings but sets a $30 price target, below the current stock price.

The report suggests that recent stock price momentum for Sirius XM Holdings is primarily due to renewed market optimism around its spectrum monetization potential, rather than higher valuation of CEO Jennifer Witz's well-executed operational and strategic initiatives.

Analysts expect the economic benefits of the spectrum will ultimately be realized through partnerships and internal new applications, not through another landmark technology, media, and telecom (TMT) M&A deal.

The report also notes that Sirius XM's core audio subscription business appears less prone to cliff-like deterioration compared to cable broadband and currently offers better economics than most existing video streaming services.

Caesars Entertainment: Acquisition Ongoing, Maintain Hold Outlook

Texas Capital Securities' latest report indicates that Caesars Entertainment's Q2 EBITDA was about 4% below expectations, mainly dragged down by weaker-than-expected performance in its Las Vegas Strip and digital businesses. As a result, the firm revised down its 2026 and 2027 EBITDA estimates by 1% each.

The report notes that Caesars did not hold an earnings call nor provide updates on its definitive acquisition agreement with Fertitta Entertainment.

In terms of business performance, even after adjusting for low table game win rates, Las Vegas Strip EBITDA was still 4% below market consensus; digital business EBITDA was roughly in line after win-rate adjustments; regional business EBITDA exceeded expectations by 7%.

Despite lowering earnings estimates, Texas Capital Securities maintains a $31 price target, consistent with Fertitta Entertainment's all-cash offer of $31 per share.

The firm points out that as of July 28, Caesars closed at $29.84, still about 3.4% below the acquisition price. Given the current M&A environment and the transaction remaining pending, the firm maintains a 'Neutral' rating on the stock.