GM shares plunge again after analyst sets ‘zero’ price target
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Most Wall Street analysts who follow General Motors Corp. have been advising clients to stay away from the stock for some time -- not a surprise, given its collapse this year and the auto industry’s dire situation.
Even so, there apparently were some investors still capable of being shocked by Deutsche Bank analyst Rod Lache’s bearish report on the automaker today.
His new ‘target price’ for GM shares: zero.
‘Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,’ Lache wrote, according to Bloomberg News, which obtained a copy of the report.
GM’s shares were down 99 cents, or 23%, to $3.37 at about 10:20 a.m. PST.
Ford Motor was off nine cents, or 4.5%, to $1.93.
Of 12 analysts following GM, eight now rate the stock a ‘sell’ or its wimpier equivalent, ‘underperform.’
GM’s appeal for federal financial help isn’t giving any comfort to Wall Street, which doesn’t see much left for shareholders if Uncle Sam agrees to write a check. The company on Friday warned that it may run out of cash early next year.
From Bloomberg:
Barclays Capital cut GM to ‘underweight’ from ‘equal weight’ in a note today. ‘We believe any government assistance would likely significantly dilute GM’s equity,’ said analyst Brian Johnson, who set a share-price target of $1. ‘GM’s only salvation is a capital injection from the government,’ said Buckingham Research Group analyst Joseph Amaturo in a note today, cutting his target price for the stock to $1 from $3.
GM’s stock market value now is $1.95 billion. That makes this pillar of American industry worth less than companies including Red Lobster and Olive Garden parent Darden Restaurants (market value: $2.6 billion), online travel services firm Expedia Inc. ($2.3 billion) and retailer Abercrombie & Fitch Co. ($2.1 billion).