The Ratings Game: Avis stock zooms to highest in two months after Goldman upgrade

This post was originally published on this site

Avis Budget Group Inc. stock rose more than 9% Monday after analysts at Goldman Sachs upgraded it to buy from sell, saying valuation looks attractive as most of the headwinds facing the car rental company and the industry are priced in.

Avis CAR, +9.00%  shares were on track for their highest close since Dec. 6 and their largest one-day percentage increase since Nov. 7. Shares of competitor Hertz Global Holdings Inc. HTZ, +9.02%  also got a lift, north of 9% as well and on pace for their highest close in more than three weeks.

Between the two companies, Avis is viewed “as the better operator and should be able to improve results (Ebitda and free cash flow) through cost optimization strategies” this year and beyond, analysts led by David Tamberrino wrote in a note.

The industry still faces “challenges,” but pricing and volume are holding up well and residual value risk from the fleet cars they sell after their life span as rental vehicles “may be skewed to the upside as auto OEMs have shown discipline recently on incentives,” the Goldman analysts said.

The analysts kept their sell rating on Hertz shares.

Avis is expected to report fourth-quarter earnings on Feb. 20, while Hertz is scheduled to report fourth-quarter results on Feb. 27. The Goldman analysts see Avis beating Wall Street quarterly expectations, while Hertz is seen as falling short on higher general expenses and interest expenses.

Analysts polled by FactSet expect Avis to report adjusted fourth-quarter earnings of 38 cents a share on sales of $2.05 billion. That would compare with adjusted earnings of 45 cents a share on sales of $2.02 billion in the year-ago quarter.

The same analysts forecast Hertz to report an adjusted loss of 94 cents a share on sales of $2.15 billion in the fourth quarter. That would compare with a loss of 77 cents a share on sales of $2.09 billion in the year-ago period.

Shares of Avis have tanked 32% in the last 12 months, while Hertz shares have fallen 14% in the same period. That contrasts with gains of 3.5% for the S&P 500 index SPX, +0.05%  in the same period.

Be Sociable, Share!

Related Posts


MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.

This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.

The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The educational training program and software services are provided to improve financial understanding.

The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.