There has always been a distinct rivalry among rental car companies, and, to a degree, this leaves investors at a crossroads when trying to make the best pick for their portfolio. However, one major Wall Street brokerage house thinks it has a clear winner and loser picked within the rivalry.
Barclays has issued a couple calls with a focus on rental car companies. Each call is fairly positive, but the analyst clearly sees one big winner within the group.
Brian Johnson was the lead analyst on the call, and he noted that the supply/demand imbalance for Avis and Hertz is being exacerbated by Enterprise, which may be adding to the rental car supply crunch by allocating fleet to its pre-negotiated corporate contracts at the expense of the leisure segment. As such, he estimates 20% of the U.S. leisure market is at stake for Enterprise to reclaim.
Johnson continues saying that he sees the fourth quarter and 2023 at risk of negative earnings revisions for Avis and Hertz, especially with the possibilities of a weakening consumer, a recovery in new car production and the possibility of Enterprise more aggressively taking back airport share. However, he sees a clear winner between these two stocks.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Barclays reiterated an Equal Weight rating on Avis Budget Group Inc. (NASDAQ: CAR) and cut the $223 price target to $158. That implies downside of 2% from the most recent closing price of $155.50. The stock traded around $151 early Monday, in a 52-week range of $65.87 to $545.11. Shares are down over 24% year to date.
On Hertz Global Holdings Inc. (NASDAQ: HTZ), Barclays reiterated an Overweight rating and lowered the price target from $23 to $21, implying upside of 26% from the most recent closing price of $16.70. Hertz stock has a 52-week trading range of $14.15 to $46.00, and it traded near $17 a share on Monday. The stock is down roughly 32% year to date.
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