Morgan Stanley Overweight On RSC Holdings

Morgan Stanley has a research note on RSC Holdings RRR. It has an Overweight rating and a $16 price target on shares. In the note, Morgan Stanley writes, "We believe the share price will rise relative to the country index over the next 60 days. Despite consistent operational improvement the past year and strong Q1 results that featured 20% volume growth, RRR has given back 20% since April 4 due to macro concerns, weaker results from a competitor and the stock's high beta. We believe Q2 results will again be strong based on normal (perhaps subdued) seasonality, the flooding along the Mississippi and challenges faced by smaller competitors. The first positive EPS print since 2008 may act as an additional catalyst. RSC's non-construction business, 62% of revenues, has likely benefitted from ongoing GDP growth. Recent share price performance suffered from the liquidation by Fairholme Capital, recently a 15% holder but now with a negligible stake. Following the recent pullback RRR trades at only 4.9x 2012 estimated EBITDA." Shares of RRR gained 34 cents yesterday to close at $11.64, a gain of 3.01%.