GM’s annual business meeting in Detroit yesterday seemed like a winner at first.Citi, Barclays, Jeffries and Deutsche Bank were among the banks to issue notes this morning with a buy rating based on mangement’s long-term strategy. Deutsche Bank wrote:
Management maintains high-level of confidence in the outlook. GM hosted its annual business meeting in Detroit. Our overall takeaway was that mgmt sounded very confident of the company’s outlook (GM’s structural costs have declined such that they should remain profitable through almost any conceivable downturn scenario). In addition, mgmt for the first time acknowledged that they still see significant operational weaknesses within the company, and that they see a path to significant margin expansion as deficiencies are addressed over the next 3-5 years. We maintain our Buy rating based on valuation.
Unfortunately the market saw things differently! Today GM shares are down over 5%, much worse than Ford though not as bad as Chrysler.
Investors may be putting more stake in GM’s announcement that its forecast for US sales may be out of reach.