UPDATE: Morgan Stanley Resumes Avis Budget at Underweight on Increased Rental Car Fleet Costs

In a report published by Morgan Stanley, analyst Adam Jonas resumed coverage with an Underweight rating and $25 price target on Avis Budget

. Morgan Stanley reported that, “We think used prices fall more than consensus expects. We expect rental car fleet costs will move upward from historic lows due to a confluence of factors hitting the market at the same time: (1) 16m US SAAR in 2013 and 17m units by 2015 will drive a greater supply of trade-ins; (2) higher sub-prime approvals add pricing risk to new while taking the bid out of the used market; (3) a weaker Yen adds pressure to D3 market share and price discipline; and (4) US off-lease volume rises 28% throughout 2013 and 70% by the end of 2015.” Avis Budget closed at $28.03 on Monday.