Morgan Stanley Moving General Motors To Best Idea

Morgan Stanley is out with a research report on General Motors GM with an Overweight rating and a $50 price target on shares. In a note to clients, Morgan Stanley writes, "GM is highly levered to both North America and emerging markets and represents an out-of-the-money call option on new product and management. Thanks to a sweeping restructuring and management change under Section 363 bankruptcy, GM has the chance to translate competitive costs and a strong balance sheet into taking risk on the top line. However, our forecasts also factor in a number of negative factors related to increased price competition in the medium term, with mix deterioration and regulatory obstacles longer-term. The 64% upside to our $50 price target is sufficient to justify an OW rating on the stock." Shares of GM are up 38 cents in pre-market trading to $31.24, a gain of 1.23%.