Deutsche Bank Loses Confidence In Hertz, Downgrades Stock Amid 50% Drop

Hertz Global Holdings, Inc HTZ reported poor Q3 results and reduced its FY 2016 guidance.

The stock may come under pressure, reflecting “a newfound lack of confidence in earnings visibility and the company’s ability to provide achievable guidance,” Deutsche Bank’s Chris Woronka said in a report.

Woronka downgraded Hertz from Buy to Hold, while reducing the price target by 59 percent, from $59 to $24.

Results And Guidance

Hertz reported its Q3 adjusted EPS at $1.58, significantly below the Deutsche Bank estimate of $2.80 and the consensus expectation of $2.73. Adj. EBITDA came in at $329 million, missing Deutsche Bank’s forecast of $467 million and the consensus projection of $482 million. Total revenues stood at $2.54 billion, short of the Street expectation of $2.59 million.

The company lowered its adjusted EBITDA guidance for FY 2016 by 33 percent at the midpoint from $850-$950 million to $575-$625 million. Adjusted EPS guidance was slashed by 78 percent, $2.75-$3.50 to $0.51-$0.88.

“At this point, there are more questions than answers, and our view is that it is now extraordinarily difficult for investors to have conviction in continued progress on the turnaround story given these latest disappointing and surprising developments,” Woronka commented.

The company's shares plunged more than 50 percent to $17.70.