slashed its price target on automaker
and downgraded the stock to hold amid concerns about the current downswing in auto sales.
The firm previously had a buy rating on GM. UBS cut its price target to $50 from $60.
UBS said it believes the slowdown in the automotive industry, which has been going on for four months, will continue through the rest of the year and into next year as well. The firm estimated the sale of 16 million vehicles in the U.S. this year, down from 17.4 million last year. UBS also projected 15.5 million vehicle sales in 2002. The firm doesn't expect an industry recovery until the second half of 2002. UBS recommended "sitting on the sidelines" until the second half of this year.
UBS also said a divestiture of
is the right move for GM shareholders. UBS said the fair value of GM would still ultimately depend on how the market values the entity that would be formed by a merger of Hughes and
Sky Global Networks
, and how much cash GM would receive through any deal.
Shares of GM fell $1.12, or 2%, to $54.12 at the close of
New York Stock Exchange
trading. Earlier this month
Standard & Poor's
cut its outlook for General Motors and
, warning that, even with recent restructuring moves, their profits are coming under pressure as domestic and international competition worsens.
On Feb. 2,
raised its 2001
estimate for GM to $3.75 from $2.50, and increased its 2002 estimate to $5.30 from $4.75.
Vehicle sales in January
fell well short of last year's totals for the Big Three automakers. GM's total vehicle sales fell 5.1% in the month.