Avis Budget Group (NASDAQ:CAR) was cut to Hold from Buy at Deutsche Bank on Thursday, with analysts maintaining a $263 price target on the stock.
The analysts told investors in a research note that the downgrade follows the stock's strong rally. Avis has climbed stock has rallied 47% since the firm's May 30 post-close upgrade.
"Importantly, we are not changing any of our forecasts or our target multiple. Simply put, the stock has rallied 47% (vs a 9% rise in the S&P 500) since our May 30 post-close upgrade at $163.27 and is now less than 10% away from our $263 price target," they explained.
"In an effort to remain disciplined with respect to ratings integrity, and in light of a view that upside and downside risks are reasonably well balanced from here, we believe a downgrade is the most appropriate course of action."
Deutsche Bank believes the bull and bear cases on CAR have merit and expect the stock to remain volatile through 2Q earnings season. However, they see the potential upside being "somewhat limited from here" unless the company surprises by reporting a large amount of share repurchase in 2Q.