General Motors shares rose as much as 2.5 percent in midday 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 November 18.
As of midday, GM shares ranged from $35.07, up 1.3 percent, to as high as $35.48, or up 2.5 percent.
GM’s starting IPO price was $33 per share.
Morgan Stanley set the highest 12-month target price among the firms issuing reports, at $50 per share.
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.”
GM’s presence in fast-growing international markets, lowered debt levels as well as a slew of new products over the few years will be advantage for the automaker, JPMorgan said.
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.
Most of the analyst reports noted the auto industry in GM’s home North American market is expected to recover gradually, but not return to levels seen before the global economy slipped in 2008.
Total U.S. light vehicle sales are expected to end 2010 near 11.4 million, up from a 27-year low in 2009 of 10.4 million. J.D. Power and Associates forecasts 2011 sales at 12.9 million.
GM faces possible pitfalls including an untested management team after the company overturned all its top management since its 2009 bankruptcy and only a few quarters of “clean financials,” JPMorgan said.
Credit Suisse said next year “won’t be easy,” for the top U.S. automaker and the No. 2 globally behind Toyota Motor Corp. GM has limited new product coming in 2011 and faces comparisons to a strong 2010, “when the company was restocking depleted truck inventories.”
Credit Suisse noted that Detroit-based GM was still trading at a deep discount to rival Ford Motor Co, based in nearby Dearborn, Michigan.
As of Monday’s close, Credit Suisse said GM 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 shares were down 0.9 percent at $16.72 on Tuesday.
JPMorgan, like Barclay’s, cited GM’s good position in emerging markets including its No. 1 market share standing in both China and the overall BRIC (Brazil, Russia, India, China) nations.
RBC Capital Markets resumed its GM coverage by calling its shares to “outperform” its market peers. It set a 12-month price target of $42.
The S&P 500 index was essentially unchanged in Tuesday morning trading.
