DETROIT (Reuters) - General Motors Co <GM.N> shares rose as much as 3.1 percent and closed 2.1 percent higher on Tuesday after banks resumed coverage of the automaker with high marks for its strong post-bailout balance sheet and its position in emerging markets.
The positive ratings by Wall Street come just six weeks after GM returned to the New York Stock Exchange in the largest initial public offering in history -- about $23.1 billion. Its high was $35.99, reached on its first day of trading November 18.
GM shares closed at $35.32 on Tuesday, up 2.1 percent, and hit a high during the session of $35.67, up 3.1 percent.
GM's starting IPO price was $33 per share.
Morgan Stanley set the highest 12-month target price among the firms issuing reports, at $50 per share.
JPMorgan started its coverage of GM with an "overweight" rating and set a price target by December 2011, at $44 per share.
Barclays Capital also rated the company "overweight" and set a price target of $42 per share.
Credit Suisse set a 12-month price target of $43 and called for GM shares to "outperform" in its resumption of rating the world's No. 2 automaker after Wall Street firms adhered to a quiet period after trading resumed.
Barclays said GM is "relatively attractive" for three reasons -- strong positions in emerging markets China and Brazil; strong earnings in North America due to price discipline; and even a conservative estimate of its financial position suggests a $42 per share price target.
JPMorgan sees the "potential for significant additional appreciations beyond year-end 2011."
JPMorgan, like Barclay's, cited GM's good position in emerging markets including its No. 1 market share standing in both China and the overall BRIC (Brazil, Russia, India, China) nations.
Brian Johnson of Barclays said GM's pension contributions in the United States are "likely to be offset by tax loss carry-forwards which we estimate could allow GM to not pay U.S. cash taxes through 2020."
The U.S. government bailed out GM for $50 billion after the automaker's 2009 bankruptcy. The Obama administration has said it is on track to recoup the full investment in GM and that it is making progress toward shedding government's stake by mid-to-late 2012.
Morningstar analyst David Whiston said how quickly Treasury exits GM is "a function of the stock price and also ultimately on Obama's reelection bid."
Most of the analyst reports issued Tuesday noted the auto industry in GM's home North American market is expected to recover gradually, but not return to levels seen before the global economy slipped in 2008. In the 10-year period to 2007, U.S. light vehicle sales averaged 16.7 million.
Total U.S. light vehicle sales are expected to end 2010 near 11.4 to 11.5 million, up from a 27-year low in 2009 of 10.4 million. J.D. Power and Associates forecasts 2011 sales at 12.9 million.
GM faces possible pitfalls including an untested management team after the company overturned all its top management since its 2009 bankruptcy and only a few quarters of "clean financials," JPMorgan said.
Credit Suisse said next year "won't be easy" for the top U.S. automaker, No. 2 globally behind Toyota Motor Corp <7203.T>: GM has limited new product coming in 2011 and faces comparisons to a strong 2010, "when the company was restocking depleted truck inventories."
Credit Suisse noted that Detroit-based GM was still trading at a deep discount to rival Ford Motor Co <F.N>, based in nearby Dearborn, Michigan.
As of Monday's close, Credit Suisse said GM was trading at 3.9 times EBITDA (earnings before interest, taxes, depreciation, amortization and pension income), versus Ford's trading at 5.5 times 2011 EBITDA.
Ford shares fell 0.8 percent to $16.73 on Tuesday.
RBC Capital Markets resumed GM coverage, saying its shares should "outperform" market peers, and set a 12-month price target of $42.
The S&P 500 index was nearly unchanged on Tuesday.
(Reporting by Bernie Woodall and Deepa Seetharaman; Editing by Derek Caney, Maureen Bavdek, Gary Hill)