UPDATE: Goldman Sachs Downgrades Avis Budget Group on More Limited Upside Following Significant Outperformance

In a report published Friday, Goldman Sachs analyst Afua Ahwoi downgraded the rating on

from Buy to Neutral, and lowered the price target from $33.00 to $30.00. In the report, Goldman Sachs noted, “Following the significant outperformance, we now see more limited upside at Avis. Additionally, our new analysis on the sensitivity between declining residuals and fleet costs suggests our prior 2014 implied monthly fleet costs growth of 1.3% was too low. As a result, we raise our fleet 2014E implied monthly fleet cost for Avis to 3.4%. Our new fleet cost forecast reduces our 2014E EBITDA forecast to $845.2mn from $885.6mn prior. This now puts us 4.5% below consensus EBITDA forecasts. We believe there is downside risk to consensus forecasts. We adjust our 2013-15E EBITDA lower to account for our higher fleet cost outlook for next, as well as to incorporate management's recent comments on 3Q trends. Our new 2013-2015E EBITDA forecasts move to $755.9mn, $846.2mn and $940.7mn from $755.7mn, $885.7mn and $984.2mn, respectively.” Avis Budget Group closed on Thursday at $28.04.