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GM Shows Horsepower on Wall Street

Markets: Auto maker's shares rise after Lehman Bros. boosts estimates for the company's earnings.

July 12, 2001|From Times Staff and Wire Reports

Investors looking for some positive earnings momentum on Wall Street are finding it in a seemingly unlikely stock: General Motors.

The auto giant's shares (ticker symbol: GM) surged $2.73 to $65.47 on the New York Stock Exchange on Wednesday after brokerage Lehman Bros. raised earnings estimates and said the company's stock is poised to go higher.

Although the blue-chip Standard & Poor's 500 stock index is down 10.6% year to date, GM shares are up 28.5%.

Lehman analyst Nicholas Lobaccaro said GM is likely to beat earnings expectations when it reports results next week.

He also raised his estimate for 2001 to $4.05 a share from $3.80.

Despite a softening market overall for new car and truck sales, Lobaccaro said, "We have been pleasantly surprised by GM's near-term [earnings] power, market share, certain product successes, inventory levels and, perhaps most importantly, its recent managerial decisions."

GM is in the midst of some big steps, including negotiating to sell its Hughes Electronics unit, which runs the DirecTV satellite television service, and to acquire all or part of South Korean auto maker Daewoo Motor Co.

What's more, GM's new chief financial officer, John Devine, has won high marks from Wall Street for his cost-cutting efforts.

GM's stock appeal was catching Wednesday: Rivals Ford Motor and DaimlerChrysler also rallied.

Ford (F) rose 57 cents to $25.32 while DaimlerChrysler (DCX) surged $2.42 to $48.49, both on the NYSE.

Year to date, Ford is up 8% while DaimlerChrysler is up 17.7%.

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