Avis made both its forecast numbers this morning, and reaffirmed last week’s full-year EPS guidance for EPS of $2.35-2.65. Analysts didn’t believe that number either, and the consensus EPS estimate rose only to $2.11.

The lack of respect for Avis’s forecast may have been due in part to an announcement from Hertz Global Holdings Inc. (NYSE: HTZ) last Thursday that it had reached an agreement with a potential buyer of the company’s Advantage rent-a-car brand, which could clear the way for Hertz’s acquisition of Dollar Thrifty Automotive Group Inc. (NYSE: DTG). That deal has been on-again, off-again for about two years, and at one time both Avis and Hertz were bidding on Dollar Thrifty.

Like Hertz, Avis revised its fleet costs downward by 3%-8%, based on the lower depreciation rates for its fleet. Used car values have risen and that has helped both companies. Dollar Thrifty reports quarterly results next week and is expected to post EPS of $1.30, up from $1.28 just a week ago, on revenue of $355.53 million.

Shares of Avis closed down -1.3% on Friday at $15.90 in a 52-week range of $8.45-$19.24. There has been no change in the share price in the pre-market so far this morning.

Paul Ausick

Avis now forecasts first quarter revenue at $1.6 billion, in-line with the consensus estimate of $1.6 billion and net income of $14 million, which works out to adjusted EPS of around $0.13, versus expectations for an EPS loss of -$0.19. On a GAAP basis the company expects to post a loss of around $23 million, primarily due to a $27 million charge for debt extinguishment.

The better news is that Avis expects full-year EPS to total $2.35-$2.65, far above the current consensus estimate of $1.59. The company attributes the jump to the higher residual value of the company’s fleet on the used car market. The company said that “vehicle rental operations [are] performing moderately better” as well.

Hertz reports first quarter results tomorrow and is expected to post EPS of $0.01 on revenue of $1.96 billion. Dollar Thrifty reports results next week and is expected to post EPS of $1.28 on revenue of $356.14 million. National Car Rental, the world’s largest car rental agency, is privately held and claims annual revenue of around $14 billion.

Zipcar reported a better-than-expected EPS loss of -$0.08 last week for its first quarter. But the company lowered the low-end of its full-year guidance which implied that the company expects slower growth. Shares fell to an intraday low of around $10.00, but have since recovered some to $12.12. Zipcar’s market cap is less than $800 million, far below the other rental firms, and it needs to show share price growth in order to maintain investor enthusiasm.

Shares of Avis are up nearly 20% in the early afternoon today, at $15.78, in a 52-week range of $8.45-$19.24.

Paul Ausick

The unofficial closing bells put the DJIA up more than 123 points to 12,904.01 (0.96%), the NASDAQ rose more than 44 points (1.51%) to 2,959.85, and the S&P 500 rose 1.1% or nearly 15 points to 1,358.05.

There were several analyst upgrades and downgrades today, including Amazon.com Inc. (NASDAQ: AMZN) cut to ‘equal-weight’ at Morgan Stanley; Deere & Co. (NYSE: DE) cut to ‘market perform’ at Wells Fargo; Nvidia Corp. (NASDAQ: NVDA) cut to ‘neutral’ at BofA/ML; Lorillard Inc. (NYSE: LO) started as ‘buy’ at Jefferies; and MEMC Electronic Materials Inc. (NYSE: WFR) raised to ‘hold’ at Jefferies.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Advance Auto Parts Inc. (NYSE: AAP) is up 7.3% at $85.20 after posting a new 52-week high of $86.30; Apache Corp. (NYSE: APA) is up 0.14% at $107.82; Barrick Gold Corp. (NYSE: ABX) is up 1.24% at $48.02; DirecTV (NASDAQ: DTV) is down -1.9% at $45.41; Duke Energy Corp. (NYSE: DUK) is up 1.53% at $21.19; General Motors Co. (NYSE: GM) is up 9% at $27.17; Molson Coors Brewing Co. (NYSE: TAP) is up 3% at $45.18; Strayer Education Inc. (NASDAQ: STRA) is down -8% at $105.81; and PF Chang’s China Bistro Inc. (NASDAQ: PFCB) is up 2% at $35.35.

Other standouts from today include the following stocks:

Jingwei International Ltd. (NASDAQ: JNGW) is up more than 43% at $2.08. The Chinese software company is being taken private.

Advance America, Cash Advance Centers Inc. (NYSE: AEA) is up more than 32% at $10.46 after posting a new 52-week high of $10.55 early this morning. The cash advance provider is being acquired by Mexico’s Grupo Elektra for $10.50/share, for a total price of about $655 million.

HyperDynamics Corp. (NYSE: HDY) is down nearly -30% at $1.42 after posting a new 52-week low of $1.01 earlier this morning. The independent oil & gas exploration and production company reported only non-commercial quantities of hydrocarbons at its offshore West African field.

PMFG Inc. (NASDAQ: PMFG) is down nearly -20% at $16.85. The machinery maker has announced a secondary offering of 2.6 million shares at $16/share.

Avis Budget Group Inc. (NYSE: CAR) is down nearly -16% at $12.28. The car rental company posted an unexpected loss in the fourth quarter.

Stay tuned for Friday. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Consumer price index
• 10:00 a.m. – Leading economic indicators

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Paul Ausick

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include the Jingwei International Ltd. (NASDAQ: JNGW), Advance America, Cash Advance Centers Inc. (NYSE: AEA), Itron Inc. (NASDAQ: ITRI), PMFG Inc. (NASDAQ: PMFG), and Avis Budget Group Inc. (NYSE: CAR).

Jingwei is up nearly 43% at $2.07. Volume is already more than 25x the daily average of about 3,300 shares traded. The Chinese software company is being taken private.

Advance America is up more than 33% at $10.54 after posting a new 52-week high of $10.55. Volume is already about 40x the daily average of 495,000 shares traded. The cash advance provider is being acquired by Mexico’s Grupo Elektra for $10.50/share.

Itron is up more than 20% at $48.40. Volume is already about 3x the daily average of around 420,000 shares traded. The water and power meter maker is acquiring a smart-meter maker for about $100 million following a better-than-expected earnings report last night.

PMFG is down nearly -18% at $17.25. Volume is already about 20x the daily average of around 63,000 shares traded. The machinery maker has announced a secondary offering of 2.6 million shares at $16/share.

Avis is down more than -14% at $12.44. Volume is already nearly double the daily average of about 1.9 million shares traded. The car rental company posted an unexpected loss in the fourth quarter.

Paul Ausick

GM and Ford have both had median target prices lowered in the past month, and GM stock is trading down more than -7% today compared to its price on November 9th. GM’s median target price is now $33.00, and at today’s price of $21.28, the potential upside is 55%. Ford’s median target price is $15.00, and at today’s price of $11.04, its implied gain is nearly 36%. Battery fires in the Chevy Volt have weighed on GM shares, and Ford is being weighed down by uncertainty about a successor to its current CEO. Ford did reinstate a $0.05/share dividend recently, which gave the shares a bit of a boost.

If US sales rise as predicted in December, the potential upsides to these two stocks could close quickly. Toyota today lowered its earnings forecast for the fiscal year ending in March by more than 50%, citing supply problems due to the floods in Thailand. If there are buyers out there, GM and Ford could benefit from Toyota’s continuing troubles.

The car rental firms are all trading lower today than they were a month ago, and the implied gains for Hertz, Avis, and Zipcar are all above 80%. It might be best to think of those as signs of further deterioration in share prices and targets rather than any sort of implied upside.

The best performers have been the dealers. AutoNation has burst through its target price, and CarMax and America’s Car-Mart both have had their target prices raised in the past month. CarMax has the highest implied upside of the three, at 11%, while America’s Car-Mart’s potential upside is about 3%. Recent strength among these dealers should continue through this month, and this looks the one sector of the auto-related industry that stands to gain the most.

The parts stores have also performed well, with O’Reilly also busting through its median target price of $80 and posting a new 52-week high today at $81.24. AutoZone posted weak earnings earlier this week, which has pushed the share price down. But the company’s implied upside to a raised target price of $360.00 is about 9%. The Pep Boys have an implied upside of about 45%, based on a target price of $16.00 and current share price of $11.00. The company’s recent weak earnings report could indicate that the target price needs to come down, not that the share price is on its way up.

The search for a value play among these stocks would probably point to either GM or Ford, both of which appear to be undervalued and to be poised on the verge of a very good sales month. While the dealers and the parts stores have performed better recently, these stocks are pretty fully valued now. The implied gains of greater than 80% among the rental car companies is not a hopeful sign.

Paul Ausick

The automakers, General Motors and Ford, have remained essentially flat. GM’s report earlier today beat consensus estimates, but the outlook for the rest of the fourth quarter was lowered. If GM’s forecast comes true, the company could miss fourth quarter EPS estimates by as much as $0.50. The company earns profits only a bit better than Ford’s on sales that are about 10% higher. That means there are still costs to wring out of GM’s manufacturing. And the company’s China sales are not growing at the pace they were a year ago either.

GM’s target price remains at $42.00, which implies an 83% upside potential. Ford’s target price also remained the same, at $16, for an implied gain of 43% above today’s price. Neither target price is realistic in today’s economy.

Among the car rental companies, both Avis and Zipcar have had target prices cuts. Avis now has a target price of $24.50, down from $27 on October 20th. The potential upside has dropped from 133% to 87%.

The current share prices at Hertz and Avis are 12% and 13% higher, respectively, than they were on October 20th. Hertz’s implied gain at today’s stock price is 81%, and Avis’s is 87%. It is impossible to imagine a scenario in which either company makes a gain of that size. Far more likely are further target price cuts.

At Zipcar, the target price has dropped from $31.25 to $30.50, and upside potential has fallen from 80% to a shade above 70%. The company’s forward P/E also fell from an outrageous 273 to a more modest 149. Maybe someday the number will return to reality. Until then, target price cuts could be expected.

Among the auto dealerships, AutoNation got a boost to its median target price, from $32 to $32.50. The stock is trading today at $34.43, about 6% above its target price. But it’s share price is down from $37.06, a drop of about -7%. AutoNation reported a 6% sales gain year-over-year in October, with the biggest gain in its luxury car sales, which were up 27%.

Both CarMax and Car-Mart are trading higher than they were on October 20th, but there has been no change to the target price for either company. Car-Mart’s current price is only 11% below its target price, setting the stage for a boost if the company posts good numbers at its earnings report next week.

The largest change in the auto sector stocks we covered in October came in the parts suppliers group. O’Reilly’s median target price was raised from $68 to $80, and the shares are trading today at $77.74, a scant 3% below the new target. Shares posted a new high today at $77.94, on a day when the markets are down more than -2%.

Neither AutoZone nor Pep Boys was able to match that, as both have put up new 52-week lows since our October report.

All data from Yahoo! Finance and current prices were gathered at about noon today.

Paul Ausick

Competition plays a critical role in car rental agencies as well. We’ve gathered some data on Hertz Global Holdings Inc. (NYSE: HTZ) and Budget Group Inc. (NYSE: CAR), who were battling over Dollar Thrifty until earlier this month. We’ve also included Zipcar Inc. (NASDAQ: ZIP) in our review because there is evidence that its short-term rental model is about to get competition from both the big rental companies and the new car makers themselves.

Finally, we’ve looked at parts suppliers O’Reilly Automotive, Inc. (NASDAQ: ORLY), AutoZone, Inc. (NYSE: AZO), and Pep Boys – Manny, Joe, and Jack (NYSE: PBY). As car owners hold onto their cars longer, parts suppliers stand to profit.

All data from Yahoo! Finance and current stock prices were gather just before noon today.

General Motors Co. (NYSE: GM) has a median target price of $42.00 from 17 brokers. Shortly before noon today, shares are trading today at $22.78, for an implied gain of $19.22, or 84%. GM’s forward P/E is 5.24 and the company does not pay a dividend. The stock’s 52-week trading range is $19.05-$39.48, and at today’s price that’s about 20% above its 52-week low and 42% below the 52-week high.

Ford Motor Co. (NYSE: F) has a median target price of $16.00 from 15 brokers. Shares are trading today at $11.61, for an implied gain of $4.39, or 38%. Ford’s forward P/E is 6.59 and the company does not pay a dividend. The stock’s 52-week trading range is $9.05-$18.97, and at today’s price that’s about 28% above its 52-week low and 39% below the 52-week high.

Hertz Global Holdings Inc. (NYSE: HTZ) has a median target price of $21.00 from 5 brokers. Shares are trading today at $10.37, for an implied gain of $10.63 or 133%. Hertz’s forward P/E is 6.43 and the company does not pay a dividend. The stock’s 52-week trading range is $7.80-$17.64, and at today’s price that’s about 33% above its 52-week low and 41% below the 52-week high.

Avis Budget Group Inc. (NYSE: CAR) has a median target price of $27 from 5 brokers. Shares are trading today at $11.61, for an implied gain of $15.39, or 133%. Avis’s forward P/E is 8.95 and the company does not pay a dividend. The stock’s 52-week trading range is $8.45-$19.49, and at today’s price that’s about 37% above its 52-week low and 40% below the 52-week high.

Zipcar, Inc. (NASDAQ: ZIP) has a median target price of $31.25 from 4 brokers. Shares are trading today at $17.38, for an implied gain of $13.87, or 80%. Hertz’s forward P/E is an astronomical 273 as the company has yet to show a profit since its IPO in April. The company does not pay a dividend. The stock’s 52-week trading range is $16.50-$31.50, and at today’s price that’s about 5% above its 52-week low and 45% below the 52-week high.

AutoNation, Inc. (NYSE: AN) has a median target price of $32 from 8 brokers. Shares are trading today at $37.06, about 5% above its consensus target price. AutoNation’s forward P/E is 17.55 and the company does not pay a dividend. The stock’s 52-week trading range is $22.28-$41.55, and at today’s price that’s about 66% above its 52-week low and 10% below the 52-week high.

CarMax Inc. (NYSE: KMX) has a median target price of $33 from 13 brokers. Shares are trading today at $27.76, for an implied gain of $5.24, or 19%. CarMax’s forward P/E is 14.06 and the company does not pay a dividend. The stock’s 52-week trading range is $22.77-$37.02, and at today’s price that’s about 22% above its 52-week low and 25% below the 52-week high.

America’s Car-Mart, Inc. (NASDAQ: CRMT) has a median target price of $37 from 5 brokers. Shares are trading today at $29.89, for an implied gain of $7.11, or 24%. Car-Mart’s forward P/E is 8.86 and the company does not pay a dividend. The stock’s 52-week trading range is $22.77-$37.50, and at today’s price that’s about 31% above its 52-week low and 20% below the 52-week high.

O’Reilly Automotive, Inc. (NASDAQ: ORLY) has a median target price of $68 from 19 brokers. Shares are trading today at $70.16, about 2% above its consensus target price. O’Reilly’s forward P/E is 17.12 and the company does not pay a dividend. The stock’s 52-week trading range is $52.97-$72.00, and at today’s price that’s about 32% above its 52-week low and 3% below the 52-week high.

AutoZone, Inc. (NYSE: AZO) has a median target price of $350 from 17 brokers. Shares are trading today at $326.17, for an implied gain of $23.83, or 7.3%. AutoZone’s forward P/E is 12.59 and the company does not pay a dividend. The stock’s 52-week trading range is $229.84-$337.23, and at today’s price that’s about 42% above its 52-week low and 3% below the 52-week high.

Pep Boys – Manny, Joe, and Jack (NYSE: PBY) has a median target price of $16 from 5 brokers. Shares are trading today at $10.95, for an implied gain of $5.05, or 46%. The Pep Boys’s forward P/E is 9.43 and the company pays a dividend yield of 1.1%. The stock’s 52-week trading range is $7.86-$15.96, and at today’s price that’s about 39% above its 52-week low and 31% below the 52-week high.

As you can see, there are some of the auto-related stocks that are close to or are now fully valued.  Still, there remains massive upside if the consensus analyst targets can be met.  Some upside targets are still so high that you have to wonder if they have been updated to reflect the new reality or if they are even really attainable.

Paul Ausick

In May, Hertz made an offer to acquire Dollar Thrifty for about $2.24 billion, substantially above Avis’s earlier offer of around $1.6 billion which was higher than Hertz’s original offer of $1.2 billion. That first offer came in the Spring of 2010, at about $50/share, a premium of about 18% above Dollar Thrifty’s then-current share price. Then Avis came in with an unsolicited counter-offer of $53/share. That was a good price until this past Spring when Hertz upped the ante to around $72/share.

Investors had pretty much lost interest in the whole soap opera by mid-June, and by early August Dollar Thrifty’s shares had fallen from a high of about $84 back to around $60, right around the $59/share mark the shares are trading at today. It was abundantly clear in August that neither Hertz nor Avis would be able to eliminate the regulatory risk.

Dollar Thrifty cushioned investors’ hopes this morning by announcing that it would proceed with its $400 million stock re-purchase program, at the rate of about $100 million/quarter in each of the next four quarters.

Dollar Thrifty also affirmed revenue and earnings guidance for the third quarter and revenue guidance for the full year. The company thinks that its low-end rentals and its brand strength will continue to serve shareholders well.

The latest wrinkle in the car rental business is the emergence of short-term, low cost rentals from companies like Zipcar, Inc. (NASDAQ: ZIP). Zipcar isn’t the biggest threat here, though, as Hertz has already unveiled a similar program and now General Motors Co. (NYSE: GM) also has plans to enter the field.

That’s where Dollar Thrifty’s competition is going to come from, and there’s not indication that the company is ready to meet it. Perhaps management has been distracted by the furor created with the takeover talks, or perhaps they just think the short-term thing is no big deal.

For its part, Hertz has apparently not given up on the deal. The company said that it continues to get regulatory approval for the merger. Some things in life are difficult to imagine, and this could be one of them.

Before the merger madness, Dollar Thrifty shares were trading around $40-$45. Virtually every dollar above that level was added in the expectation of a deal that didn’t get done. About the only thing keeping the price from dropping like a rock is Hertz’s statement that it hasn’t given up on the deal.

Is the fair price for Dollar Thifty around $72/share, $59/share, or $45/share? We’re about to find out.

Paul Ausick

The Zipcar formula is simple. The company makes cars available in most large cities. These cars can be rented for short periods of time at low prices. Zipcar has hundreds of locations in large cities like New York.

Zipcar assumed that the large car rental companies like Hertz (NYSE: HTZ) and Avis-Budget (NASDAQ: CAR) would ignore it and stay with their models of renting cars for fairly long periods and renting vehicles to business travelers. Zipcar management must have been surprised when Hertz launched its “on demand” service. Hertz charges no membership fee. Zipcar does. Hertz guarantees it will have cars available during the week. Its fleet is large enough that it can offer cars at many locations on weekends as well. Hertz may not have as many locations as Zipcar, but it can use its substantial network to challenge Zipcar in its most important markets — large cities.

General Motors (NYSE: GM) has decided to enter the short-term car rental field. Its RelayRides program allows GM customers to rent their cars to others. GM uses its OnStar technology to make these rentals easier for owners and renters. GM has a large enough universe of owners that hundreds of thousand of them could use the program.

Zipcar’s success was based to a large extent on the size of its fleet. It is expensive for another company to match it without spending tens of millions of dollars to acquire cars. What Zipcar did not count on was that firms that already had huge numbers of vehicles would find a way to use that inventory to flank it.

Douglas A. McIntyre

Applied Materials Inc. (NASDAQ: AMAT) Cut to Sell at Goldman Sachs.
Avis Budget Group (NYSE: CAR) named as Bull of the Day at Zacks.
Bristol-Myers Squibb Company (NYSE: BMY) Raised to Buy at Jefferies.
Broadcom Corporation (NASDAQ: BRCM) Raised to Outperform at William Blair.
Citi Trends, Inc. (NASDAQ: CTRN) named as Bear of the Day at Zacks.
Colgate-Palmolive Co. (NYSE: CL) Added to Focus 1 List at BofA/ML.
Enbridge Inc. (NYSE: ENB) Started as Outperform at Scotia.
Huntsman Corporation (NYSE: HUN) Reinstated as Neutral at BofA/ML.
Lam Research Corporation (NASDAQ: LRCX) Cut to Neutral at Goldman Sachs.
Micron Technology Inc. (NASDAQ: MU) Raised to Neutral at Goldman Sachs.
Pier 1 Imports, Inc. (NYSE: PIR) Raised to Buy at KeyBanc.
Renren Inc. (NYSE: RENN) Started as Underperform at Macquarie.
Telefonica, S.A. (NYSE: TEF) Raised to Buy at UBS.

See last week’s top analyst calls here.

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JON C. OGG