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Citigroup Downgrades GM to Hold from Buy

1387 Views 24 Replies 11 Participants Last post by  Buickman
GM Declines After Citigroup Cuts Shares on Higher Energy Costs

May 27 (Bloomberg) -- General Motors Corp. fell after Citigroup Inc. cut its rating on the largest U.S. automaker to ``hold'' from ``buy,'' citing higher energy and commodities costs as well as continuing credit constraints.

``Auto fundamentals are poised to deteriorate beyond 2008,'' Citigroup analysts wrote in a note. GM faces ``reduced earnings power and cash burn risks.''
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This nicely contrasts to the article by Dodge & Cox in which their analysts suggested as late as last week that GM stock hit its nadir in the 19's. For reference, GM closed at about $17.20 today (05/27/08). Yes, I'm aware that stock price isn't necessarily correlated with the true performance of a company; one should understand the fundamentals of the company to determine if the stock is something to buy. But with a weak balance sheet and a falling stock price, it sounds like Citi is calling the shot correctly, at least for now.
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