This Analyst Would Buy The Weakness In Avis Budget

The Street is clearly not happy with the company's presentation, and the selloff was attributed to cautious commentary from Avis Budget's executives on international trends and a declining demand environment in Europe.

Analysts at MKM Partners were among the first to jump in with their take. In a brief note, the analysts noted that shares of Avis Budget gained 4 percent over the past week heading into the presentation wile shares of its biggest rival, Hertz Global Holdings, Inc HTZ lost 4 percent over the same period.

Related Link: UPDATE: Traders In Avis Attributing Selloff To Cautious Exec Comments On Int'l Trends, Declining Euro. Demand

The analysts noted that Avis Budget's management said the pricing environment in North America was positive, but the focus centered on weaker demand in Europe. Specifically, management said the weak environment had a single digit ($ million) impact on EBITDA and the geographical segment accounts for approximately 20 to 25 percent of total revenue. In addition, weakness was observed in August.

The analysts added that comments on pressure within the large commercial contract pricing was "far from new" but "seemed to spook the market."

Bottom line, the analysts are recommending investors buy this weakness, especially since management said that pricing in North America by far outweighs the negative impact seen elsewhere.

At Time Of Writing ...

• Avis was down 6.04 percent at $36.57.
• Hertz was down 6.34 percent at $43.25.

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