Barclays maintains an 'Overweight' on General Motors (GM); Labor Contract Appears Consistent with Our Base Case

Barclays maintains an 'Overweight' on General Motors (NYSE: GM) price target of $38.00.

Barclays analyst says, "GM-UAW contract appears in line with our base case: We believe the contract settlement will be neutral for the GM, as it meets our base case of a mildly inflationary contract that increases profit sharing in good years (and includes signing bonuses), offset by longer-term savings from increased Tier Two caps, but without significant near-term offsets that would attract new investors or improve competitive positions."

"Adds about 3c to costs; Overall, on a preliminary basis we see the agreement as adding only modestly to costs, before the cost of the Spring Hill plant. Assuming a buyout of 100 skilled trade workers, In a year that additional profit sharing is paid, the net result might be about $60 mn higher costs (or about 3c per share), with cost savings in a year that profit sharing is not paid. We note that the program may be cost neutral if enough skilled trade workers (about 2,400) choose early retirement."

For more ratings news on General Motors click here and for the rating history of General Motors click here.

Shares of General Motors closed at $22.61 yesterday.

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