The run-up in
has left the shares fairly priced, while troubling trends in vehicle sales pose a near-term risk, Deutsche Bank said in lowering the stock to sell from hold Tuesday.
The downgrade follows a week in which GM rose nearly 14%. Analysts at Merrill Lynch and Prudential both raised their ratings to buy, citing faster-than-expected uptake of the company's employee buyout program, a key component of its multiyear cost-cutting initiative.
For Deutsche Bank, the benefits of recent positive developments for the automaker look priced into the stock. The downgrade comes three weeks after the brokerage upgraded GM to hold on optimism about the buyouts, labor talks with
and the possibility of a decent second quarter.
"We believe that at least two of these three factors are in the stock," DB wrote: the Delphi talks and the employee cuts. "At this point we believe increased caution is once again warranted, as underlying business fundamentals continue to deteriorate, and appear likely to overwhelm GM's cost cutting efforts."
The brokerage said retail vehicle sales "appear to be moderating" as buyers run out of money in a toughening economy.
"Pickup truck demand, which had been holding up relatively well until recently, appears to have taken a negative turn. Sales were down 7.7% in April, and we believe the comps will get worse in May," DB wrote.
The stock closed Friday at $28.08.