Avis Budget Group's (CAR) Massive Buyback Program May Represent Peak Earnings - Morgan Stanley

August 5, 2021 8:42 AM EDT
Get Alerts CAR Hot Sheet
Price: $103.28 +3.28%

Rating Summary:
    4 Buy, 6 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 13 | New: 52
Trade Now! 
Join SI Premium – FREE

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

Morgan Stanley analyst Billy Kovanis reiterated an Equalweight rating and $85.00 price target on Avis Budget Group (NASDAQ: CAR) noting that the company is expecting record earnings in 2021, but investors remain hesitant on the durability of earnings growth beyond 2021. This requires management to reinvest peak profits to set the company up for LT growth going forward which could help to unlock the Bull Case.

The analyst stated "The good news is that Avis can deploy its excess free cash flow generated in this environment. We have seen the company make moves already, but in the form of buybacks. In the 2Q-2021 10Q, Avis disclosed that from July 12, 2021 through August 3, 2021, the company repurchased ~4.1 million shares of common stock at a cost of ~$318 million. Further, in August 2021, the board approved an additional $1bn of buyback increases. In our model we now expect $650mm of buybacks in 2H-2021, leading to a decline in share count by ~8mm (11% of shares
outstanding). The bad news is that buybacks could be a sign of peak earnings..."

For an analyst ratings summary and ratings history on Avis Budget Group click here. For more ratings news on Avis Budget Group click here.

Shares of Avis Budget Group closed at $74.95 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS Change, Analyst EPS View

Related Entities

Morgan Stanley, Earnings