Multiple Analyst Firms Initiate Coverage On Hertz Global

Several analyst firms initiated coverage on Hertz Global Holdings Inc HTZ, and Deutsche Bank reinstated it.
Deutsche Bank analyst Chris Woronka reinstated coverage of Hertz Global with a Buy rating and a price target of $34, implying 32% potential upside.
Woronka mentions that the "current valuation gap" between Hertz and Avis Budget Group Inc CAR is "illogically wide."
The analyst noted Hertz recently announced a $2B share repurchase authorization that would enable it to buy back 17% of the current market cap, while it is highly unlikely that Avis is in the market buying its stock now.
He believes it will likely take some time for many investors to reengage on the Hertz story. However, the "potential ability to broaden out the investor base in light of a larger market cap and forward-looking growth initiatives that can appeal to multiple investor groups, should be viewed as a positive catalyst."
Morgan Stanley analyst Billy Kovanis initiated Hertz Global with an Equal Weight rating and a price target of $27, implying an upside of 5%.
While bullish on Hertz's ability to leverage its strategic relationships in the long term, Kovanis remains cautious on the potential for earnings to revert downward by 2023.
He views Hertz as a relative outperformer to Avis, on which he has an Underweight rating.
Barclays analyst Brian Johnson initiated with an Overweight rating and a price target of $28, implying an upside of 9%.
The analyst is "constructive" on Hertz's turnaround story and appreciates its "bold moves" to position itself as a premier electric vehicle operator.
JPMorgan analyst Ryan Brinkman initiated Hertz with an Overweight rating and a price target of $30, implying an upside of 16.6%.
Brinkman sees a "number of very strong industry and macro tailwinds" for the company, including an "unprecedentedly strong" used vehicle pricing backdrop and the supply/demand imbalance affecting rental cars.
He mentions, there is no quick or easy solution to the global semiconductor shortage constraining light vehicle production.
He believes an investment in Hertz offers investors "substantial upside exposure to potentially higher than expected inflation."
Goldman Sachs analyst Stephen Grambling initiated with a Neutral rating and a price target of $32, implying an upside of 24%
Grambling says the company benefits from an "ideal backdrop" for the rental car industry of rapidly recovering travel demand, reduced supply of industry-wide fleets, and a broader vehicle shortage driving up used car pricing.
The analyst, however, sees a "wide-risk reward," saying Hertz's strategic pivot is "still proving out."
Price Action: HTZ shares are trading higher by 6.77% at $25.69 and CAR higher by 1.92% at $266.16 on the last check Monday.

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