Avis Budget Group Has Many Things Going For It, Including This Catalyst

• Avis Budget Group Inc CAR shares have lost 34 percent year-to-date, after touching a high of $66.66 on January 7.
• MKM Partners’ Christopher Agnew maintained a Buy rating on the company, with a price target of $70.
• Updates from the company’s CFO David Wyshner at a fixed income conference on September 29 could act as a catalyst, Agnew said.

Avis Budget’s CFO David Wyshner is scheduled to provide updates on the company at a fixed income conference on September 29. These updates could act as catalysts. Analyst Christopher Agnew added that the company’s strengths lie in improving industry metrics, strong free cash flows, share repurchases and margin expansion potential.

Avis Budget is expected to boost its margins through rack rate hikes as well as mix and ancillary revenue sales. In the report MKM Partners noted, “We have observed a mid-October Avis Budget-led price increase that was met with strong initial acceptance” from Hertz Global Holdings Inc HTZ (Rated: Buy, $29 PT).

Volumes at Avis Budget are a “coincident” indicator of economic activity, Agnew said, while adding that leisure travel has been strong so far this year, although tough comps in September due to calendar shifts make y/y comps difficult. The analyst believes that Avis Budget benefited in Europe because of the weak dollar and robust Inter-European travel.

The continuity and improvement in the corporate governance measures by Avis Budget’s new leadership have been received well, Agnew added.