Goldman Sachs Starts Hertz Global (HTZ) at 'Sell' and Avis Budget (CAR) at 'Neutral'
- Record-setting rally pushes on as S&P ends week up 3 percent
- Trump's Cohn Pick Most Bullish Sign Yet for Banks - Cowen
- Unusual 11 Mid-Day Movers: (IDXG) (INVN) (EBS) Higher; (SCON) (DTEA) (DLTH) Lower (more...)
- 21st Century Fox (FOXA) offers to acquire Sky for GBP10.75/share
- Coca Cola (KO) Announces James Quincey to Succeed Muhtar Kent as CEO; Kent to Continue as Chairman
Get daily under-the-radar research with StreetInsider.com's Stealth Growth Insider Get your 2-Wk Free Trial here.
(Updated - October 24, 2016 8:41 AM EDT)
Goldman Sachs initiated coverage on Hertz Global (NYSE: HTZ) with a Sell rating and a price target of $29, implying downside of 12%. Avis Budget Group (NASDAQ: CAR) was initiated at Neutral. Analyst David Tamberrino sees residual value pressure and higher costs.
"We see downward pricing pressure lowering ‘risk vehicle’ residual values and increasing vehicle depreciation costs. This limits margin expansion potential and lowers earnings growth. We see a larger impact at HTZ given its US fleet is 80% ‘risk vehicles’ vs. CAR at 65%," said Tamberrino.
"Despite significant market consolidation (36% HHI), with the largest player in the market (approx. 3x the fleet size of public peers) operating from a lower cost position, we believe it is hard for both CAR and HTZ to command sustained pricing power – even in a rising cost environment," continued the analyst.
Tamberrino added, "In a highly commoditized market (vehicles, product offering, pricing levels), we differentiate our views via our pricing survey work, fleet make-up, and interest rate exposure –which indicate HTZ should see a larger relative pricing headwind in 3Q16, is more exposed to higher vehicle cost increases and rising interest rates. For CAR, we are more in-line with the Street and see less of an impact from lower residual values/higher vehicle depreciation cost."
Shares of Hertz Global closed at $32.94 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- UBS Cuts Price Target on Restoration Hardware (RH) to $34 Following 3Q
- BTIG Starts Mitek Systems (MITK) at Buy
- MKM Partners Raises Price Target on Broadcom Ltd. (AVGO) to $207 Following 4Q Beat
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, New Coverage
Related EntitiesGoldman Sachs, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!