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Merrill upgraded General Motors (GM
) to near-term buy from neutral.
Analyst John Casesa says the company's improvement in its North American product mix is driving its accelerating EPS momentum while the stock still is trading at the low end of its historical multiple range. He expects this mix improvement to overwhelm difficult market conditions for the foreseeable future; he sees solid EPS growth in 2002 to $3.50. Casesa believes GM is at a positive inflection point, even if its recovery is 'U' shaped rather than 'V' shaped, as an internal improvement will likely be buffeted by declines in U.S. demand and pricing. He says GM is not enjoying a classic cyclical recovery. Casesa has a $70 target.