Market Overview

I think you’ll love what you hear,
what you’ll see and the opportunities
that will be set before you.
- Jon Najarian
GET TICKETS

Citi Adds United Rentals To Focus List Amid Machinery Stock Rally

Share:

Citi has added United Rentals, Inc. (NYSE: URI) to its U.S. Focus List as it sees a number of catalysts driving the stock higher. The addition comes amid a sharp rally in machinery stocks (and risk assets more broadly), which has led to increased questions from investors about the overall sustainability.

"Recent industry/company data points suggest ongoing rental capex restraint, which combined with easing Industrial headwinds, should help to drive yr/yr rate growth (and earnings acceleration) by 4Q16," analyst Timothy Thein wrote in a note to clients.

Related Link: RBC Met with United Rentals Management: Here's What Happened

The stock has traded closely with oil since late '14, and Citi remains bullish oil prices relative to the forward curve, with its year-end forecast about 30 percent above current December contracts.

Meanwhile, Citi's Quant team expects smaller cap, higher beta value names to outperform near-term, which provides further support to our positive call on URI.

Tailwinds

The stock offers compelling leverage to cyclical, secular (strength in non-residential US construction) and company-specific tailwinds.

"We recognize the risk that lower Energy spending could have greater negative repercussions than what is currently assumed, but believe at current prices investors are more than adequately compensated, especially given robust FCF generation and a shift towards renting," Thein noted.

Thein has a Buy rating on United Rentals stock, which closed Friday's regular trading session at $57.49. The stock has dropped 21 percent this year.

Latest Ratings for URI

DateFirmActionFromTo
Apr 2019MaintainsOverweightOverweight
Dec 2018Initiates Coverage OnEqual-Weight
Oct 2018MaintainsOverweightOverweight

View More Analyst Ratings for URI
View the Latest Analyst Ratings

Posted-In: Citi machinery Timothy TheinAnalyst Color Markets Analyst Ratings Trading Ideas

 

Related Articles (URI)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
CINFReiterates120.0
HARPAssumes
CLLSAssumes
XLRNAssumes
FLWSUpgrades22.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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

'Controversial' Micron Has 32% Downside, Nomura Warns After Asia Trip

Look Who's Coming To Dinner: The Restaurant ETF