Credit Suisse Upgrades GM On 'Signs Of Self-Help' And Balanced Risk

In a report published Friday, Credit Suisse analyst Dan Galves upgraded the rating on

from Underperform to Neutral, while maintaining the price target at $33. While the company has been showing "signs of self-help," its risks appear balanced now. General Motors reported robust Q2 results, with meaningfully better than expected results in North America and Europe that drove the EPS well ahead of the consensus and estimates. While China came in below expectations, margin came in flat. Analyst Galves believes that there is "meaningful evidence of self help and solid decision-making" by the management. Significant cost savings were achieved on carryover vehicles, which not only offset increases in fixed cost but also drove the North American margins up n 1H15. "Mgmt is clearly targeting price over volume...there is evidence of this in NA, LatAm, and China," the Credit Suisse report said, adding, "Progress in loss-making regions: annualized losses in Europe, LatAm, and Asia ex China improved to $0.9bn in 2Q15 vs $2.2bn in 1Q15, without much help from volume." Despite the fact that the company is facing several risks, the analyst believes that the stock is already discounting for these risks, while expecting General Motors to report robust cash yield going forward. There is limited visibility, however, into the company's earnings growth potential.