Hertz Global Holdings (HTZ) stock received two rating cuts today, with both JPMorgan and Deutsche Bank moving to the sidelines.
Analysts at JPMorgan downgraded the car-rental company's recommendation from overweight to neutral.
They expressed concerns about the lack of near-term positive catalysts and reduced its estimates, citing a deterioration in underlying earnings in the fourth quarter and its potential implications for 2024.
“While the stock arguably trades inexpensively on normalized out-year earnings (our estimate of which has not declined commensurately with the stock price), we see few near-term positive catalysts on the horizon after reducing our estimates,” analysts said.
As such, they now expect “Hertz in 2024 to neither grow earnings (after excluding the one-time charge in 4Q23) nor to generate positive free cash flow, suggesting little potential also to capitalize upon a lower stock price via share repurchases.”
Similarly, analysts at Deutsche Bank cut the rating to Hold from Buy. They made a ratings swap as they upgraded Avis Budget Group (CAR) to Buy while cutting HTZ.
“Simply put, we see an unreasonably wide risk/reward disconnect between the two stocks here. We also believe HTZ’s well-chronicled EV strategy, which recently pivoted to include the sale of one-third of the fleet, leaves investors with little conviction in the company’s true run rate earnings power over the next few years,” analysts wrote in a note.
HTZ was also downgraded last week at Jefferies.
HTZ stock fell 1% in early Thursday trade while CAR added 3.3%.