Wall Street turns cautious on Verra Mobility after Avis blow
Investing.com -- Analysts turned sharply bearish on Verra Mobility after the company disclosed that longtime customer Avis Budget Group had terminated its tolling services contract, a move expected to wipe out roughly 13% to 14% of annual revenue and significantly pressure earnings.
Analysts at Robert W. Baird downgraded Verra Mobility to “Neutral” from “Outperform” and slashed their price target to $8 from $20, warning that the loss of Avis raises fresh doubts about the durability of the company’s commercial-services business.
Baird estimated the Avis contract represented about $132 million in annual revenue, or roughly 30% of Verra’s commercial-services segment revenue. The brokerage said the loss could reduce annualized EBITDA by $120 million to $125 million and cut earnings per share by nearly $0.60 annually.
The firm also warned that investors may now question whether other major rental-car clients, including Enterprise and Hertz, could eventually seek alternative providers or move operations in-house. Those contracts are believed to come up for renewal in 2027.
Meanwhile, analysts at JPMorgan Chase downgraded the stock to “Underweight” from “Neutral” and cut their price target to $8 from $17, citing customer-concentration risks and mounting margin pressure tied to both the Avis loss and the company’s New York City contract.
JPMorgan noted that Verra now expects the contract termination to reduce annualized commercial-services revenue by $135 million to $145 million and segment profit by $120 million to $125 million before any cost-cutting measures. The bank said the top three rental-car customers account for more than 35% of companywide revenue and roughly 80% of commercial-services revenue.
Following the announcement, Verra Mobility lowered its 2026 guidance. The company now expects revenue of $985 million to $995 million, down from prior guidance of about $1.02 billion to $1.03 billion. Adjusted EBITDA guidance was reduced to $380 million to $385 million from $405 million to $415 million, while adjusted EPS guidance was cut to $1.19-$1.25 from $1.32-$1.38.
Despite the downgrade, both firms acknowledged that Verra still maintains strong positions in government traffic-enforcement systems and smart mobility infrastructure. However, analysts said uncertainty around customer renewals and declining profitability could weigh on sentiment through at least 2027.