JPMorgan says negative reaction to GM's earnings may be 'overdone,' recommends scooping up the stock

An employee carries a headliner to be installed onto a vehicle at the General Motors assembly plant in Arlington, Texas.
Matthew Busch | Bloomberg | Getty Images

The pullback in General Motors' stock this week following its earnings release may be "overdone," JPMorgan told clients on Wednesday, advising them to use the drop as a buying opportunity.

"Essentially, the quarter was neither here nor there, in stark contrast to the share price reaction, and we believe GM remains well positioned to grow EPS in 2017, contrary to consensus; as such, we reiterate our overweight rating and recommend taking advantage of the pullback in GM shares by adding to positions," equity analyst Ryan Brinkman wrote in a research note.

On Tuesday, GM reported earnings and revenue figures that exceeded analysts' expectations, but the stock fell nearly 5 percent on concern North American sales are near a top.

"We believe GM EPS has not peaked and continue to forecast stronger results in 2017 vs. 2016," Brinkman said.