Goldman Sachs Cuts Number on GM (GM), Still Sees Big Upside for Long Term Investors

Goldman Sachs cut estimates and its price target on General Motors (NYSE: GM) from $34 to $32 but maintained their Buy rating following Q3 results and guidance.

While Q3 results were in-line with the firm's expectations, guidance for Q4 was "significantly worse" pointing to a $1.1 billion quarter-over-quarter decline in EBIT versus the $0.4 billion the firm had expected.

Like Ford (NYSE: F), cost inflation has offset much of the leverage opportunity from higher production this year leaving GM incrementals at 5% on their new forecasts. They see a re-acceleration in 2010 to about 10% as commodity cost inflation moderates along with persistently depressed spot rates, and as the company implements its plan to straight-line its development investment.

Goldman said an investment in GM requires a long-term view, but with $11 per share in cash and 4% potential upside to their price target investors stand to get well paid for patience.

Goldman's 2011/2012/2013 estimates were adjusted to $3.93/$3.97/$4.96 from $4.26//$4.17/$5.16.

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 $22.31 yesterday.

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