UBS Maintains a 'Buy' on General Motors (GM); Additional Actions to De-Risk Pensions is Costly

June 4, 2012 10:46 AM EDT
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UBS maintains a 'Buy' on General Motors (NYSE: GM) price target of $30.00 (from $32.00).

Analyst, Colin Langan, said, "GM announced a plan to eliminate $26bn of its $134bn in pension obligations by transferring these obligations to Prudential. GM will be providing Prudential with assets worth 110% of the GAAP pension obligation. GM said this announcement "sets precedent for additional actions.""

"We are lowering our EPS estimates for 2013-16 by $0.10 to reflect higher pension expense. We are lowering our price target $2 to reflect the premium paid to Prudential. Our $30 price target is based on a 3.5x EBITDAP on core auto ops, $6/sh for Chinese JVs, and $3/sh for NOLs."

For an analyst ratings summary and ratings history on General Motors click here. For more ratings news on General Motors click here.

Shares of General Motors closed at $22.01 yesterday.

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