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Goldman Sachs downgrades GM stock, readjusts price targets

by Drew Johnson

Between rising gas prices and union strikes, it seems the domestic automakers just can't catch a break. General Motors and Ford have been fighting their declining North American operations for months now, the toll of which is really starting to be felt on Wall Street.

General Motors' stock was already on the "neutral" list, but on Thursday Goldman Sachs further downgraded GM's stock to "sell". In addition, Goldman Sachs added GM's stock to its "Americas Sells List," according to Automotive News.

Goldman Sachs cited further cash burn and shareholder dilution as the reason for the downgrade. "We think GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company's dividend," analyst Patrick Archambault told Automotive News.

Archambault also reduced his 6-month price target of GM's stock to $11, a reduction of $8.

In addition, Archambault cut his price target of Ford's stock by to $5 from $8 -- although Ford remains on Goldman Sachs' "neutral" list.