Oppenheimer Reiterates Outperform On United Rentals, Raises PT to $37

In a note out today, Oppenheimer reiterated an outperform rating on United Rentals

, but raised its price target on the stock to $37 from $29, implying significant upside in the shares. "We're reiterating our Outperform rating and increasing our target to $37 from $29 following URI's announcement that it expects to acquire RSC Holdings

by 6/30/12 for $4.2B ($3.2B debt/$1.9B equity). We believe the combination of these two leaders in the emerging equipment rental industry, which is secularly benefitting from customers increasingly opting to rent vs. buy, should result in significant growth over coming years as cyclical headwinds transition to tailwinds. Furthermore, momentum is robust near-term as both companies' 4Q11 to-date (through 11/30/11) rental revenue far exceeded our expectations. Increasing our outlook for URI and RRR, and factoring a portion of $200M in total deal cost savings by 12/31/12, our 2012E NewCo (URI/RRR) EBITDA is a robust $1.737B," Oppenheimer said in the note.