rose Tuesday after analysts at Deutsche Bank praised the automaker's recent cash-raising initiatives.
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Deutsche raised GM to hold from sell, citing its success selling a controlling interest in GMAC for roughly $14 billion last month. Deutsche also downplayed the risk of a strike at bankrupt supplier
"GM has generated a substantial amount of liquidity from asset sales, and will likely end the year with over $27 billion of cash and short-term
voluntary employee-benefits account assets. We also believe that GM's cash burn will likely moderate in 2007 and 2008, and the risk of catastrophic developments
i.e., a Delphi strike has diminished," the brokerage wrote. "In fact we believe there's a reasonably good chance that an agreement on Delphi can be reached within the next 60 days, which should be a positive for the stock."
At midmorning, GM shares were up 98 cents, or 4.2%, to $24.53.
Deutsche cut GM to sell in early February, citing a familiar litany of concerns, including falling market share, bulging costs and undiversified earnings sources. "Most of these concerns still appear to be valid," the brokerage noted Tuesday, adding that the company must find new revenue to offset its high expenses.
"As we have pointed out in other reports, GM's cost savings plan overstates the truth about real cash cost savings. Cash cost savings are only $4 billion, which compares with GM's $6.7 billion cash burn in 2005," Deutsche wrote. "The bottom line is that GM's plan needs revenue growth
or at least revenue stability in order to work. Based on this and the considerable obstacles facing the company, we remain cautious on GM's shares."