CREDIT: Citigroup Downgrades Hertz Global (HTZ) Senior Notes to Neutral
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Price: $2.24 -4.68%
Rating Summary:
3 Buy, 6 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
3 Buy, 6 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Citigroup credit analysts downgrades Hertz Global Holdings (NYSE: HTZ) 6.25% & 5.875% senior notes from Buy to Neutral, telling clients to take profits.
Credit analyst Manish Somaiya said, "HTZ reported softer-than-expected 4Q results with revenues of $2.6bn (+10% y-o-y) and corporate EBITDA of $406mm (vs. mgmt. implied guidance of ~$510mm). 2014 guidance also appears slightly below vs. market expectations. Separately, the board approved plans to spin-off HERC (on a tax-free basis) into an independent, publicly traded Company. Proceeds from new debt at the HERC entity (~$2.5bn estimated) are to be used for debt pay down and share buybacks at HTZ Car Rental (recall, we had anticipated a “balanced” approach in our recent note ). HTZ 6.250% senior notes are 1pt higher today at 106.25, representing a six month high. Given our expectation for limited further positive catalysts and management’s 2.5-3.5x leverage goal, we downgrade the bonds to Neutral from Buy. Recall, the bonds generated 5.7% total return since Nov12, 2013, when we recommended the trade (vs. 3.9% return on HYM Index."
Credit analyst Manish Somaiya said, "HTZ reported softer-than-expected 4Q results with revenues of $2.6bn (+10% y-o-y) and corporate EBITDA of $406mm (vs. mgmt. implied guidance of ~$510mm). 2014 guidance also appears slightly below vs. market expectations. Separately, the board approved plans to spin-off HERC (on a tax-free basis) into an independent, publicly traded Company. Proceeds from new debt at the HERC entity (~$2.5bn estimated) are to be used for debt pay down and share buybacks at HTZ Car Rental (recall, we had anticipated a “balanced” approach in our recent note ). HTZ 6.250% senior notes are 1pt higher today at 106.25, representing a six month high. Given our expectation for limited further positive catalysts and management’s 2.5-3.5x leverage goal, we downgrade the bonds to Neutral from Buy. Recall, the bonds generated 5.7% total return since Nov12, 2013, when we recommended the trade (vs. 3.9% return on HYM Index."
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