Skip to main content

Market Overview

Watch Out Below? Longbow Analysts Downgrade United Rentals Two Weeks After Upgrading It

Share:
  • The share price of United Rentals, Inc. (NYSE: URI) has declined 45.9 percent over the past year, to a low of $45.58 on Thursday.
  • Longbow’s Neil Frohnapple has downgraded the rating on the company from Buy to Neutral.
  • The downgrade is based on the lower-than-anticipated rental rate outlook for 2016, with the company guiding to a decline in rental rate of 1-2 percent.

Analyst Neil Frohnapple mentioned that the “weaker than anticipated demand in Canada presents another source of potential risk to results over the next few quarters,” while adding that “yesterday's sell-off largely incorporates these incremental headwinds, but we think risk is to the downside as we move further along in the non-residential construction cycle.”

United Rentals reported its adjusted EBITDA at $744 million, below the consensus and the estimate, with lower than expected adjusted EPS at $2.19, primarily driven by lower than expected rental revenue and higher than anticipated tax rate.

“URI is positioned to continue to benefit from expected growth in U.S. non-residential construction; however, we think other headwinds including excessive industry fleet supply, negative rental rates, and further weakness in Canada will more than offset this in 2016,” Frohnapple said.

On a positive note, the company is expected to generate free cash flow of $900 million over the next two years, driven partly by lower fleet capex. Frohnapple believes that this would provide United Rentals adequate cash to complete its share buyback authorization of $1 billion and to pay down debt.

Latest Ratings for URI

DateFirmActionFromTo
May 2021Argus ResearchMaintainsBuy
Apr 2021Morgan StanleyMaintainsUnderweight
Apr 2021KeybancMaintainsOverweight

View More Analyst Ratings for URI
View the Latest Analyst Ratings

 

Related Articles (URI)

View Comments and Join the Discussion!

Posted-In: Longbow Research Neil FrohnappleAnalyst Color Downgrades Analyst Ratings

Latest Ratings

StockFirmActionPT
FIBKStephens & Co.Downgrades
LEAFCanaccord GenuityDowngrades8.5
AGMSidoti & Co.Downgrades115.0
KEXGabelli & Co.Downgrades
OCGNCantor FitzgeraldDowngrades11.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com