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GM Analyst Sees Possible Upside Surprise in 2Q Earnings

DETROIT ( TheStreet) -- GM (GM - Get Report) shares are already up 22% this year, but a top auto industry analyst sees room for more gains.

"We expect very encouraging (second quarter) results from General Motors, with potential for a meaningful upside surprise vs. consensus," wrote Deutsche Bank analyst Rod Lache, in a report issued Tuesday. "We believe that GM's Q2 call could be very significant, as we expect a significant acceleration in profitability" starting in the second half of the year.

GM will report second-quarter earnings two weeks from today on July 25. Analysts surveyed by Thomson Reuters estimate earnings of 74 cents a share. Lache is at 82 cents and wrote "We believe our estimates may be too low, as we see potential upside from volume, costs and pricing in North America."

However, share price optimism is not unanimous. In a recent report, S&P Capital IQ analyst Efraim Levy rated GM a hold, with a target price of $33. Levy wrote that applying a multiple of eight to his 2013 earnings forecast of $3.32 leads to his target. The consenus full-year earnings estimate is $3.28.

GM, like Ford (F - Get Report), is benefitting from continuing strong auto sales, which are leading to continued increases in expert estimates of 2013 sales. On Tuesday, for example, UBS analyst Colin Langan raised his estimate for 2013 light vehicle sales to 15.5 million units. Levy estimates 15.4 million.

Auto sales have risen steadily since hitting a 27-year-low of 10.3 million in 2009. The 2012 total was 14.5 million. "We remain bullish on the US automakers given their exposure to the US recovery, potential for market share gains, and rising full size pickup demand," Langan wrote in a note. He has buys on Ford and GM.

Part of the charm of both companies is strong pickup truck sales. In June, GM pickup truck sales rose 29%, Ford F-150 sales rose 24% and Chrysler Ram sales rose 23%. Also, Toyota (TM - Get Report) pickup truck sales rose 16%.

In the midst of the boom, GM has just started to roll out its new 2014 Silverado.
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