💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

UPDATE 1-GM up 2.5 pct after high marks from Wall Street

Published 12/28/2010, 10:14 AM
Updated 12/28/2010, 10:48 AM

* JPMorgan restarts coverage with "overweight," $44 target

* Barclays rates "overweight," $42 target

* Credit Suisse rates GM "outperform," $43 price target

* Shares rise as much as 2.5 pct to $35.48 (Adds Credit Suisse commentary, market open)

DETROIT, Dec 28 (Reuters) - General Motors Co shares rose 2.5 percent in early trading on Tuesday after banks resumed coverage of the automaker with high marks for its North American sales and position in emerging markets.

The positive ratings by Wall Street come just six weeks after GM returned to the New York Stock Exchange in the largest initial public offering in history -- about $23.1 billion. Its high was $35.99, reached on its first day of trading Nov. 18.

In early trading, GM shares ranged from $35.23, up 1.8 percent, to as high as $35.48, or up 2.5 percent.

JPMorgan started its coverage of GM with an "overweight" rating and set a price target by December 2011, at $44 per share.

Barclays Capital also rated the company "overweight" and set a price target of $42 per share.

Credit Suisse set a 12-month price target of $43 and called for GM shares to "outperform" in its resumption of rating the world's No. 2 automaker after Wall Street firms adhered to a quiet period after trading resumed.

Barclays said GM is "relatively attractive" for three reasons -- strong positions in emerging markets China and Brazil; strong earnings in North America due to price discipline; and even a conservative estimate of its financial position suggest $42 per share price target.

JPMorgan sees the "potential for significant additional appreciations beyond year-end 2011."

Advantages for GM include "high exposure to the fastest growing auto regions," "a sound balance sheet that will delever significantly further by 2013," and "considerable medium term product opportunity."

The U.S. government bailed out GM for $50 billion after the automaker's 2009 bankruptcy. The Obama administration has said it is on track to recoup the full investment in GM and that it is making progress toward shedding government's stake by mid-to-late 2012.

Credit Suisse noted that Detroit-based GM was still trading at a deep discount to rival Ford Motor Co, based in nearby Dearborn, Michigan.

Credit Suisse said GM, at its $34.60 close on Monday, was trading at 3.9 times EDITDAP (earnings before interest, taxes, depreciation, amortization and pension income), versus Ford's trading at 5.5 times 2011 EDITDAP.

Ford closed Monday at $16.87 per share, and in early trading on Tuesday slid 0.5 percent to $16.77. (Reporting by Bernie Woodall; Editing by Derek Caney and Maureen Bavdek)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.