Analyst: Japan Shortages Should Benefit General Motors

NEW YORK (AP) — General Motors Co. should benefit more than any U.S. competitors from the shortage of Japanese cars resulting from the earthquake in Japan, a Credit Suisse analyst wrote Tuesday in upgrading the stock.

That could boost the biggest U.S. automaker's earnings this year by 60 cents a share, Credit Suisse said.

The report came the same day that GM reported its U.S. car and truck sales leaped 26 percent in April as the economy continued to improve and $4-a-gallon gasoline pushed buyers into more fuel-efficient vehicles.

The automaker is much better prepared for higher gas prices than in the past because if offers a wider selection of smaller vehicles.

THE SPARK: Credit Suisse upgraded its 12-month rating on GM stock to "Buy" from "Neutral." It also raised its estimate for GM's fiscal 2011 earnings to $4.50 a share from $3.90 and its target share price to $42 from $35. The shares have traded between $29.17 and $39.48 over the past 52 weeks.

THE ANALYSIS: Credit Suisse analyst Colin Langan said while his firm has been cautious on GM's prospects, "We now view the Japan situation as the catalyst we've been looking for to carry GM through its weak launch period. Credit Suisse also sees GM's first-quarter earnings rebounding from a weak fourth quarter, Langan wrote.

GM, which received a $50 billion bailout from the Bush and Obama administrations, has made a remarkable comeback from bankruptcy and is on pace to claim the title of world's biggest automaker this year, retaking the top spot from Toyota.

SHARE ACTION: GM shares advanced 75 cents, or 2.3 percent, to $32.93 in early afternoon trading Tuesday. Earlier they surpassed $33, the price at which the government sold nearly half of its GM shares in a $15.8 billion initial public offering in November.