Shares of Hertz Global Holdings Inc. jumped on Monday after JPMorgan recommended investors to buy, citing strong industry tailwinds and several company-specific drivers that propelled the car rental company to its close peer, Avis. Budgets make it more attractive than Budget Group Inc.
Analyst Ryan Brinkman at JPMorgan started Hertz on the upside and set a $30 stock price target, which is up about 16% from current levels.
It gained 7.8% in afternoon trade. It has slipped 0.9% since closing its first day of trading on the Nasdaq exchange on Nov. emerge from bankruptcy on 30 June.
Brinkmann cited several reasons for his bullish stance on Hertz:
Hertz stock is up 56.6% over the past three months, including the time it was traded over the counter. But Avis Budget Share CAR,
After receiving the meme treatment in the wake of strong third-quarter results, the stock has nearly tripled, up 194.4% in the same time frame, followed by a big jump in bearish bets on the stock. For reference, the S&P 500 Index SPX,
Has grown by 1.6% in the last three months.
Brinkman rates the Avis Budget underweight with a price target of $225, which is 17% below current levels.
Brinkman wasn’t the only analyst with a bullish call on Hertz on Monday. Deutsche Bank’s Chris Voronka reinstated coverage after the ban period, with a buy rating and a $34 stock price target.
That target, which is up 31% from current levels, makes Voronka Wall Street’s fastest analyst on Hertz out of seven analysts surveyed by FactSet covering the company.
Voronka said his buy rating was a “relative valuation call, at the top”, as he rates the Avis budget on sales.
“In our view, the current valuation gap between the two companies is irrationally wide,” Voronka wrote.
Voronka said that while Hertz recently announced a $2 billion stock repurchase program, which represented about 18% of the company’s market capitalization at the time, he believes it is “highly likely.” No” that Avis Budget is currently buying back stock. Prices have risen after the third quarter results.
“Our understanding is that it may take some time for many investors to reconnect on this [Hertz] story, noting that the stock had been trading on major exchanges for nearly 18 months and the company was unable to appear with the investment community,” Voronka wrote. “That said, due to a large market capitalization and future-oriented growth initiatives In light of this the potential to broaden the investor base which may attract multiple investor groups, should be seen as a positive catalyst.”