On Thursday, Deutsche Bank adjusted its outlook on Hertz Global Holdings (OTC:HTZGQ) Inc. (NASDAQ:HTZ), reducing the car rental company's price target from $10.00 to $6.00, while keeping a Hold rating on the stock. The move comes ahead of the first quarter earnings season, with Hertz set to report first among its peers. The bank anticipates that the upcoming earnings will reflect a broader weakness in the quarter, potentially marking the low point of the post-pandemic correction period.
The analyst from Deutsche Bank noted that all relevant data since January suggests an industry-wide soft quarter is imminent. Despite this, there is a strong belief that this will be the lowest point, with improvements expected thereafter. The bank's preference leans towards Avis Budget Group Inc. (NASDAQ:CAR) over Hertz, citing the latter's recent change in CEO and the uncertainties that such a transition can bring.
In the same report, Deutsche Bank also revised its price target for Avis Budget Group, lowering it to $183 from $202. This adjustment reflects a continued endorsement of the Buy rating for Avis, contrasting with the more cautious stance on Hertz. The revisions to the price targets were accompanied by related estimate changes, although the details of these revisions were not specified in the context provided.
The analyst's comments underscore a belief that the first quarter will validate the trends indicated by data from the start of the year, with expectations for a rebound following what is hoped to be the nadir of the current cycle. The preference expressed for Avis over Hertz is attributed to the potential strategic shifts that might follow the recent executive changes at Hertz.
The updated price targets for Hertz and Avis reflect Deutsche Bank's latest analysis and expectations for the car rental sector as it navigates through the post-Covid landscape. The bank's position suggests a cautious approach to Hertz in the near term, while signaling a more optimistic outlook for Avis Budget Group.
InvestingPro Insights
In light of Deutsche Bank's revised outlook for Hertz Global Holdings Inc . (NASDAQ:HTZ), current real-time data from InvestingPro provides additional context for investors. Hertz is currently trading at a low Price / Book multiple of 0.51, which may appeal to value investors seeking underpriced assets relative to their book value. Additionally, despite the challenges highlighted by Deutsche Bank, Hertz's management has been actively buying back shares, signaling confidence in the company's intrinsic value and future prospects.
Nevertheless, the company's financial health is a concern, as it operates with a significant debt burden and short-term obligations that exceed its liquid assets. This financial leverage is a critical factor for investors to consider, especially in the context of an industry-wide soft quarter. Moreover, Hertz's stock has experienced a steep decline over the past year, with a one-year price total return of -57.82%, reflecting the market's reaction to the company's performance and sector trends.
For investors seeking deeper insights and additional metrics, InvestingPro offers more tips on Hertz, which can be found at https://www.investing.com/pro/HTZ. To assist with a comprehensive analysis, users can take advantage of an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24. Currently, there are 17 additional InvestingPro Tips available, providing a more granular view of Hertz's financial landscape.
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