Morgan Stanley downgraded General Motors (GM) and Ford (F) to equal-weight from overweight.
Analyst Stephen Girsky says he changed his industry view to in-line from attractive. He says a consumer pullback, and the potential for flat-to-down vehicle sales/production in 2003, is likely to make earnings per share growth for automotive makers and suppliers more dependent upon individual company performance.
He says while auto stocks still are cheap on a normalized earnings basis, they have become more expensive. Girsky notes that GM and Ford are up 22% and 19%, respectively, vs. the S&P 500 index. Additionally, his expectations are more realistic.