GM Takes A Downgrade GM

Lat week, 24/7 Wall St. published two stories saying that the rise in GM's stock was unwarranted by the fundamentals and the risks facing the company. In particular, it is unclear whether the UAW and other unions will strike Delphi, which would shut down GM's North American operations in a matter of days. In addition, there is strong evidence that GM's sales are continuing to drop, especially in their profitable SUV and pick-up lines.

This morning, Deutsche Bank dropped its rating on the stock from a "hold" to a "sell", indicating that "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 trend in GM's stock is likely to be down from here, unless the Delphi strike issue is resolved favorably or GM reverses its negative sales trends.

Douglas A. McIntyre