UBS Remains Sidelined on United Rentals (URI) Following 2Q - PT to $73

UBS reiterated a Neutral rating on United Rentals (NYSE: URI), and raised the price target to $73.00 (from $71.00) following the company's 2Q earnings report. URI raised its 2016 rental rate growth guidance to down 2-3% from down 3-4%. The company continues to expect 2016 revenues of $5.6-5.8b, and adj EBITDA of $2.65-2.75b.

Analyst Steven Fisher commented, "We think the main Q2 positives were sequential rental rate improvement in May and June, after 16 months of sequential rate declines, and higher 2016 rental rate guidance. URI noted some ongoing weakness in Canada, but cited strength in US markets (coasts/specialty). Mgmt expects the business to improve "seasonally and cyclically." We think the key metric continues to be rental rate growth, and we think investors will view the guidance increase favorably. URI attributed the improvement to URI specific strategies based on data analytics, rather than a broader tightening in the market. We think the rate improvement is positive regardless. If URI can keep rates flat sequentially in 2H, rates could trend to the upper end of guidance. Mgmt thinks overfleeting is still an industry headwind, and 2016 utilization guidance is slightly lower."

For an analyst ratings summary and ratings history on United Rentals click here. For more ratings news on United Rentals click here.

Shares of United Rentals closed at $69.86 yesterday.

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