Bear Stearns analyst Peter Nesvold believes the new labor agreement GM signed with the UAW is transformational -- just not right now. Nesvold shifted GM to the "underperform" pile in the expectation that GM's stock price would drop in the near term. Instead, Nesvold recommends Ford because it "represented a better turnaround play."

Other analysts don't feel the same, though, with Moody's, Credit Suisse, and JP Morgan all saying good things about the General. Moody's is going so far as to say that it might upgrade GM's rating in the next 12 months -- something Moody's hasn't done for nearly ten years. The Credit Suisse analyst pegged GM's stock to hit $43, from its current $31.

Why the near unanimity? Even though US vehicle sales are down to near-1998 levels this year, they are expected to rebound next year, and GM's got an umbrella in the form of $30 billion in cash and almost $6 billion in available credit. As the rebound occurs, GM will also benefit from having shed itself of health care obligations, and as UAW workers retire from their $78-per-hour positions, GM can hire new workers for $26-per-hour. That's a huge piggy bank, a big lifeline, a giant monkey off its back, and tremendous savings. Which makes us wonder why Bear Stearns has such a long face when it comes to GM...

[Source: Auto News, sub req'd]


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