GM stock extends gains in 15% run
Embattled automaker sees another gain in Wednesday's trading; shares up this week on restatement and analyst upgrade.
NEW YORK (CNNMoney.com) - Shares of General Motors climbed Wednesday, extending gains posted this week following a restatement of first-quarter results.
Shares of GM (up $0.96 to $26.51, Research) rose strongly, as much as 4.2 percent in midday trading, before slipping to about a 3 percent gain in the early afternoon. That advance followed an 11 percent gain Tuesday.
GM initially issued first-quarter results April 20. The restatement came this past Monday because GM received guidance from the Securities and Exchange Commission that it could extend over seven years, starting in the third quarter, the $3 billion payment it expects to make to cover changes in its retiree health care coverage, rather than taking a $1 billion charge in the first quarter.
The change left the company with a 32 cent a share profit excluding special items, compared with a forecasted 44 cent a share loss in the period before the report. The company originally reported a 94 cent a share loss excluding items other than the health care charge.
Shares are up 29 percent since the initial first-quarter report in April.
The gains in the stock come even as a bankruptcy court judge in New York is hearing arguments about whether bankrupt auto parts maker Delphi should be able to dump its union contracts and impose steep wage cuts on 33,000 hourly workers, a move that could spark a strike at GM's largest supplier and halt production at GM plants.
Still even with the hearings taking place, GM officials insist they believe that an agreement will be reached between Delphi, the unions and GM to avoid a shutdown. And most experts tend to agree.
Also this past Monday, Deutsche Securities upgraded GM's stock to a "hold" rating from "sell."
"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," analyst Rod Lache wrote in his upgrade note, which noted that GM still faces problems with market share, mix of vehicles sold and an uncompetitive cost structure.
First Call, which tracks analysts' recommendations and forecasts, now lists two analysts with buy recommendations, 10 with holds, two with sell recommendations and three with strong sells. That's a slight improvement since mid-April, but four analysts had buy recommendations in December.
Is the worse over for GM? Click here.
For more on the what's at stake for GM in the Delphi bankruptcy hearing, click here.