Analyst Rob Hinchliffe raised his rating on the shares by two notches, to "Buy" from "Sell," and doubled his price target on the stock to $48 from $24, citing what he sees as "transformational change under way" following GM's new contract with the United Auto Workers.

Union members earlier this month approved the deal, struck in late September, to shift $51 billion in retiree health costs to the UAW.

The contract also allows GM to reduce labor costs, Hinchliffe noted, with new workers' earnings in line with top competitor Toyota.

"Most importantly, terms of the 2007 contract reduce the number of skilled jobs, which are the most sought after jobs in the plant," he wrote in a note to clients. "With fewer available skilled jobs, senior workers will likely be more enticed to accept buyouts."

The analyst suggested potential savings from the contract could equal $3 billion, savings he said "mitigate the risk associated with near term economic issues."

Hinchliffe is now one of seven analysts reporting to Thomson Financial with "Buy" or equivalent ratings on GM, while seven have "Hold" or similar ratings and four remain at "Sell" or the equivalent.

General Motors shares gained 46 cents, to $38.42 in early trading. The stock has traded between $28.49 and $43.20 in the past year.