SAN FRANCISCO (AFX) -- General Motors shares jumped more than 8% Wednesday after Merrill Lynch raised its rating on the stock, citing that the automaker's restructuring plans, specifically the number of workers taking buyout packages, are coming along ahead of schedule.
GM's stock, which has added about a third of its value since the beginning of the year, finished up $2.03 at $26.51.
Merrill Lynch analyst John Murphy upgraded GM to buy from neutral with a price target of $37 a share. He said that, based on discussions with the United Auto Workers and other industry sources, those accepting the packages should come in at about 30,000 by June 23 -- the same number of jobs GM said it was looking to eliminate by 2008.
'GM and its shareholders are clearly better off if buyouts are widely accepted, as are workers,' he said. 'A worker accepting the buyout is contributing to the health of GM making their future benefits more secure, especially versus the worst case scenario of a bankruptcy.'
GM is offering some of its 113,000 hourly workers $35,000 to retire early, while others are offered between $70,000 and $140,000 to cut ties with the company.
Earlier this month, GM said, without offering specifics, that it was pleased with the amount of employees taking the offer.
Murphy added that GM still faces numerous risks, including market share losses, a strike at Delphi, and rising gas prices. GM's long-term success, according to Murphy, hinges on the company's ability to downsize its operations to a 'defensible market share' of about 19%.
On the gasoline front, GM on Tuesday said it is initiating a fuel price protection program that will cap expenditures made by consumers in California and Florida on gas at $1.99 This story was supplied by MarketWatch. For further information see www.marketwatch.com.