Ford, GM Shares Buoyed by Hopes for March

Detroit (TheStreet) -- Auto sales were flat in February, but automakers and analysts blamed the weather for the third straight month of flat or lower sales and looked to March for a boost.

Trading in shares of the two publicly traded Detroit automakers reflected optimism. GM (GM) shares had a good day Monday, rising in a down market. The shares gained 1 cent to close at $36.21. Year-to-date after Monday's close, GM shares were down 11.4%, while the S&P 500 was flat for the year.

Ford (F) shares fell 19 cents on Monday to close at $15.20, down 1.5% for the year. But Ford shares were rising and among the most active in pre-market trading Tuesday. Minutes after the opening, Ford was trading up 11 cents at $15.31 and GM was up 31 cents to $36.52.

In a report issued Tuesday, JPMorgan analyst Ryan Brinkman referred to a "month-end surge" in February sales and said he expects a strong March. "We are encouraged by commentary from both GM and Ford on the cadence of sales throughout the month, with sharp improvement toward month-end, the portion of the month in which weather was least harsh," he wrote.

Brinkman wrote that the 1% decline in GM sales was far better than the consensus estimate of an 8.4% decline. He noted the slowdown in the rate of year-over-year decline in closely watched pickup sales -- Combined Silverado and GMC Sierra sales fell 8.9% in February compared with a decline of 17.1% in January and 9.4% in December. Brinkman said GM pickup sales benefited from "an incentives campaign that captured disproportionate consumer attention while representing only modestly higher cost to the company."

GM's share of pickup truck sales rebounded to 35% in February from 33.3% in the prior two months and a low of 31.4% in November, Brinkman wrote. He rates both GM and Ford as overweight.

"The first half (of February) was a bit slow, but we saw a very good rebound over the past two weeks," said John Felice, vice president, U.S. marketing, sales and service, on the Ford sales call. He said a parts shortage caused by the weather disruption pushed 10,000 fleet sales into March, which is seemingly a good start for the current month.

"We feel as we head into March we'll be in very good shape," he said.

In a note issued Tuesday, Sterne Agee analyst Michael Ward noted that auto sales rose 7.5% in 2014 and he expects a fifth consecutive annual improvement in 2014.

However, Ward wrote, "Sales have been lower than expected in the first two months of 2014 and while weather had some impact on the total, continued sluggishness in the spring selling season would likely result in downward revisions to our assumptions."

Auto sales were flat in December, down 3% in January and flat in February. Ward currently expects sales of 16 million units in 2014, which is slightly below most estimates. Sales totaled 15.5 million in 2013.

Written by Ted Reed in Charlotte, N.C.

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