KeyBanc Ups General Motors to Hold from Underweight
KeyBanc raised its investment recommendation on General Motors (GM ) to hold from underweight, citing the company's tentative deal with the United Auto Workers to cut expenses on health care for employees.
Analyst Brett Hoselton thinks the company's annual employee health care expenses will decline by about $3 billion on a pre-tax basis, given a projected plan to cut material costs by $1 billion in 2006. The analyst still thinks GM is facing substantial challenges as it attempts to restructure its business, but is encouraged by the large concessions the company has been able to tentatively achieve regarding reducing its health care burden. Hoselton says GM also announced its pending reduction in retiree health care by about $15 billion, or 25% of its hourly health care liability.