Why In The World Is GM Up? Three Reasons

General Motors GM is trading up roughly 2.5 percent this Tuesday morning, not even one full day after issuing yet another recall. The reason for the appreciation in shares may be attributed to analyst notes this morning out of UBS UBS and JP Morgan JPM both bullish on the stock.

First JP Morgan is overweight the company in a note highlighting 3 key developments:

1. GM concluded its enhanced product safety review that has led to a significantly elevated pace of vehicle recalls
2. That program went out with a bang, with another 8 mn vehicles being recalled for an additional cost of $500 mn when lumped in with several earlier recalls
3. Kenneth Feinberg set the parameters of a GM program to compensate individuals who were injured or family members of those who perished in accidents.

Second, UBS issued a morning note with GM annoucing the bank will maintain its Buy and maintain its Price Target of $49.  UBS comments on the unknown compensation to be offered through Ken Feinberg's plan but pegs a broad range of "$20,000 to potentially several million dollars" while putting an estimate on the upper bound of ~$300M, ~1/3rd of Toyota Motors TM $1.1B civil settlement. The banks includes a recall list of:

1. 1997-2005 Malibu
2. 1999-2005 Grand Am
3. 2004-2008 Grand Prix 

The result of the GM mess is going to be seen in earnings, which UBS cut for 2014 from $3.00 to $2.80 to account for $500M increased recall costs related to the three models highlighted above.

Finally, GM June sales rose 1 percent whereas Reuters reported the consensus estimate was a lost of over 6 percent.