Hertz Shares Up 80% In 17 Days; Analysts Break Down Industry Trends

Hertz Global Holdings, Inc HTZ continued to outperform the market on Monday as shares rose 3 percent.

With Monday’s price action, Hertz is now up over 80 percent in the last 17 days and up over 40 percent in the last week.

What Could Have Caused This Surge?

Macquarie analyst Hamzah Mazari highlighted how shares of Hertz have only traded up higher since his July 7 note, where he noted how the market is close to the trough in the car rental sector.

In his note, Mazari said with Hertz due to a report earnings in the second week of August, he expects the company to say overcapacity in the fleet is behind Hertz.

“Our checks indicate the company aggressively sold cars into throughout 1H despite low used car pricing which has since improved in May/June," he said.

Additionally, Mazari highlighted while it's expected that Hertz will miss Q2 earnings expectations, the stock might go up based off of positive commentary as demand trends remain relatively strong.

“When they report," Deustche Bank analyst Chris Woronka told Benzinga, "I do think the forward commentary, in terms of rental car pricing and what is the expectation for used car values in the back half of the year, their comments about that I do think are going to outweigh whatever those Q2 results are.”

He went on to agree positive sentiments could continue to move Hertz shares.

“I think what a lot of us are hearing is more positive things in July, in terms of rental car pricing, which has been negative for most of the year. I do think there is probably a growing drumbeat of evidence to suggest that pricing at the rental counter is improving,” Woronka said. “So yes, I do think that whatever they say, if they confirm that pricing at the rental counter is getting better right now that is going to be significant for the stock.”

Morgan Stanley Reflects Similar Sentiment

In Adam Jonas' latest research, published on July 14, he also highlighted the recent rally in Hertz and Avis Budget Group Inc. CAR, which is up 52 percent over the last four weeks. He sees the price action being "driven by strategic tie-ups with tech firms and improving pricing trends into June and July."

Jonas also pointed out how 90 percent of the stock's price movement on earnings day will be driven by management commentary on the most recent and forward-looking guidance.

Overall, Mazari’s optimism about the stability in the rental car sector might have been just enough to spark investor optimism in Hertz over the last week.

Hertz declined to comment on the possible reasoning behind the recent price action.

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