Reuters
Goldman cuts General Motors, shares down
Thursday June 26, 9:31 am ET


(Reuters) - Goldman Sachs downgraded General Motors Corp (NYSE:GM - News) to "sell" from "neutral," and added the stock to its "Americas Sell List," saying the main risks for the automaker included likely equity dilution, dividend cut and cash burn.






GM shares, which have lost 47 percent of their value since the start of the year, were down nearly 8 percent at $11.81 before the bell on Thursday.

Analyst Patrick Archambault, who also cut his ratings on Lear and Tenneco, said he expects GM shares to continue to underperform as market fundamentals deteriorate which exacerbates liquidity concerns.

He cut his 6-month price target on GM stock by $8 to $11.

"We think GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company's dividend," Archambault said.

He downgraded auto parts maker Lear Corp (NYSE:LEA - News) to "sell" from "neutral," citing its large exposure to Big Three trucks, referring to General Motors Corp (NYSE:GM - News), Ford Motor Co (NYSE:F - News) and Chrysler LLC (CBS.UL), and rising raw material costs.

The analyst slashed his 6-month price target on Lear stock by $12 to $16. Lear shares closed at $18.12 Wednesday on the New York Stock Exchange.

Archambault also cut his rating on Tenneco Inc (NYSE:TEN - News) to "neutral" from "buy," and price target to $18 from $29. He removed the stock from the "Americas Buy List."

Tenneco's shares are expected to remain under pressure as the company is likely to post weak second-quarter results, he said. However, the analyst believes this would be a better buying opportunity as he sees the company as a core long-term holding with strong earnings and growth prospects.

He also cut his price target on "neutral"-rated Ford Motor Co (NYSE:F - News) to $5 from $8. Ford shares were down almost 4 percent at $5.04 in early trade.

(Reporting by Eric Yep and Dilipp S. Nag in Bangalore; Editing by Himani Sarkar)

 

And GM thinks that raising prices on cars a grand will help their financial position/stock price. That will play right in to the Japanese/Koreans hand.

 

I don't think they'll be alone in raising prices. The entire economy is showing major signs of inflation (I paid $3 for eggs the other day!).

Still, for the next 72 hours you can buy a Tahoe for $7,000 off (if you're a GM owner) and 0 percent financing for 72 months.

My lord things look bleak for this company right now.

 

Will Ford or GM have the first penny stock (under $1)?

 

If GM stock dips low enough, I'm considering buying.

 

Now would be a good time to buy. I bought half of my GM stock at $63 and the other half at $31.

 

I bought some at 16.50 and some at about 14. I'm reevaluating when I'm going to make my next purchase now though.

 

I'm a hesitant buyer. Most of the stocks I've purchase have failed, and I don't want to see GM fail.

I'm still kicking myself for not buying Apple ten years ago when it was at $10 and I thought it was going to go up.

 

I'm kicking myself for not buying Google... My goodness, that stock was the gold mine. It went from $85 at IPO, to $700 in October 2007.

 

Time to give Wagoner the boot. How couldn't the gm board members predict the affect of gas prices? Seriously, two ASIAN auto manufactures can predict America's economy but the American Big 3 cant. WTF. What is exactly going on in the gm board room i wonder? Are they having mad halo 3 tournaments? I bet because you forget to do important things like, i dunno, making reliable fuel efficient cars.

GM needs to get serious if they are going to save the company. GM stock hasn't been this low sense 1955! Kill GMC, Pontiac, and HUMMER.

I am die hard GM but, they need to get their chit together fast.

 

yeah a 53 year low is no joke. Its falling farther and faster than I thought it would when I bought in. I though 12 would be the bottom but its under 11.50 now. Market Cap is at 6.5 Billion. Avon is worth more than that!

 

Which two asian manufacturers? Is one of them Toyota? The same Toyota who's having just as much trouble selling their fullsize trucks and SUVs as GM is? Give me a freakin' break!

 

No, Toyota was stupid. However, they have the cash to be stupid.

Wagoner needs to go......... and probably Lutz too. The board has to actually make a decision, and needs to actually look like they are doing something............... anything. Wagoner needs to go because he has had plenty of time to really make a difference, and also seems hesitant to make decisions. Lutz needs to go because of his mouth, and the fact that he really isn't the best product guy when fuel economy is a main purchase consideration.

 

Lutz has been vital to the product turnaround that is happening right now. The improved interiors, more expressive styling, better overall image... he was instrumental in that.

I don't think Lutz should go anywhere. The company is going to need someone with some cojones now more than ever.

 

GM closed down 10.77% to end the day at $11.43/share on a day the DJIA dropped $358. Oil is up over $5/bbl and the head of OPEC claims it will hit $150-170/bbl.