Avis Budget Group (CAR) PT Lowered to $85 at Goldman Sachs

Goldman Sachs analyst Lizzie Dove lowered the price target on Avis Budget Group (NASDAQ: CAR) to $85.00 (from $90.00) while maintaining a Neutral rating.

The analyst comments "Bottom line: Though the stock reaction to 3Q24 results was positive, we take a more cautious view, with our Q4 EBITDA estimate coming down to $7mn (from $143 prior). There were two key things we learned: 1) that total company gross DPU would be $350 in 4Q and 2) that Americas RPD would transition seasonally as it normally does from 3Q to 4Q. We believe there is some room for interpretation in this guidance, and ultimately take a more conservative view. Firstly, we model gross DPU of $350, but net DPU of $400 assuming higher losses on sale. Secondly, we model the recent seasonality of Americas RPD (-9% sequentially) vs. the pre-COVID seasonality of -6%, which leaves our 4Q RPD estimate at -2% y/y. These two combined impacts, along with lower volumes from greater competition and continued de-fleeting, leaves us with minimal EBITDA generation in 4Q. However, our 2025 estimate of ~$1bn EBITDA is broadly unchanged, and assumes fleet costs get considerably better throughout the year to $330 DPU, and flattish RPD. As a result, our price target moves lower to $85 from $90 on lower estimates, and we remain on the sidelines pending further proof points."

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