Actionable news
All posts from Actionable news
Actionable news in HTZ: HERTZ GLOBAL HOLDINGS Inc,

Car Rental Outlook Getting Better, MKM Says

Invest with Confidence. Are you a financial professional? Stay on top of your portfolio with Benzinga Pro's real-time newsfeed and alerts and never miss a headline again.
Don't miss the chance to try it FREE today.

Both Hertz Global Holdings Inc HTZ 6.21% and Avis Budget Group Inc. CAR 0.77% indicated pricing weakness in 1Q. MKM Partners’ Christopher Agnew maintained Buy rating for both companies, saying that the outlook seems to be improving due to industry actions.

Hertz mentioned during its business update on April 11 that the 1Q pricing environment had been significantly challenging due to excess capacity. Analyst Christopher Agnew said that the pricing weakness indicated by Hertz and Avis Budget was not fully reflected in the consensus estimates.

Addressing Excess Capacity

“The industry has, however, taken proactive actions to rightsize fleet in March and April and we believe we are starting to see some benefits. Therefore, we are encouraged as we head into the strong leisure demand period over the summer,” Agnew wrote.

April Pricing Trends Indicate Improved Fleet Situation

Checks indicate that pricing was stabilizing in the 7-10 days prior to the rental date in mid to late April. This is indicative of supply and demand being more in equilibrium, the analyst mentioned.

April Manheim Encouraging

Used car prices rose in April from the prices recorded in March, “which likely indicates that selling pressure from excess rental fleet in March has largely abated,” Agnew said. He added that although the index for wholesale used vehicle prices was tracking down y/y, it seems to be “back on trend and in-line with existing expectations for fleet costs.”

The price targets for Hertz and Avis Budget have been maintained at $16 and $38, respectively.

Apr 2016Credit SuisseDowngradesOutperformNeutral
Mar 2016Sterne Agee CRTInitiates Coverage onNeutral
Mar 2016Morgan StanleyUpgradesUnderweightOverweight

© 2016 Benzinga does not provide investment advice. All rights reserved.