(Changes source, adds details)
Sept 17 Bear Stearns upgraded Ford Motor Co
(F.N) to "outperform," saying Ford looked more appealing
despite overall softening auto sales.
The brokerage, which has a $10.50 price target on Ford's
stock, noted that the company's cash flow has exceeded
expectations in the last three quarters, leading management to
improve its 2007-08 cash burn outlook.
The brokerage added that earnings per share benefit from a
Voluntary Employee Beneficiary Association (VEBA) means as
much, if not more, to Ford than General Motors (GM.N).
To date, most attention has been focused on the benefit to
GM partly because the United Auto Workers chose GM as the lead
negotiator in the labor talks with Detroit's three automakers,
the brokerage said.
"However, we think Ford is more interesting here," the
Ford has nearly $40 billion of automotive cash, with
additional asset sales still to come, which should facilitate a
VEBA funding, Bear Stearns said.
It is not clear whether GM has sufficient liquidity to fund
VEBA without a meaningful capital raise, the brokerage added.
(Reporting by Nachiket Kelkar in Bangalore)