Morgan Stanley: 'Something's Not Right' At General Motors

General Motors Company'sGM
third-quarter results may have sounded at first blush a tad better than reality, while an analyst questioned whether the company is positioning itself for big upcoming changes in the sector. GM closed Friday down nearly 3 percent at $30.04 a share. Morgan Stanley's Adam Jonas said results for the recent period were "fine" with strong results in both North America and China. "But we're left with the feeling that something just isn't right." Jonas called the next several years a "critical" period for the company to lay its long-term strategy, but said company's managers may suffer from complacency and lack of urgency implied by the task. Shorter term, Jonas dismissed GM's 2015 guidance Friday as "aspirational benchmarking rather than real financial targets." Given recent uncertainty about growth in Europe and volatility in China, "no auto company is in a position to confidently forecast any level of performance in 2015," Jonas said, maintaining and Under-Weight rating. Similarly, Deutsche Bank's Rod Lache reiterated a Hold on GM, while praising its recent North American profit margin of 10 percent. But a recent trend toward weaker prices in North America and a slowdown in China's economy may undercut the company's 2015 forecast, Lache said. Cash flow is getting diverted by recall and litigation costs as well as restructuring. "An inflection may be two years away" for the measure, Lache said. "But that is quite far" for investors, especially in light of interim risks. Net income for the recent quarter leaped 81 percent and adjusted earnings of $0.97 a share beat estimates by $0.02. Yet automotive sales dipped 0.3 percent to $37.99 billion from $38.12 billion a year earlier. GM's operating income tumbled 45.6 percent to $1.23 billion from $2.26 billion last year.

Posted In: Adam JonasDeutsche BankMorgan StanleyRod LacheAnalyst ColorEarningsGuidanceReiterationAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.