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There Were Several Factors Behind Hertz's Huge Miss

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There Were Several Factors Behind Hertz's Huge Miss
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Credit Suisse thinks there are several factors behind Hertz Global Holdings, Inc. (NYSE: HTZ) big earnings miss. However, the firm retained its Neutral rating and the target price of $48 on the company’s stock.

Analyst Anjaneya Singh believes pricing wasn't the only factor that resulted in a wider miss. He pointed out the soft volumes, increased spending on operating and administration, recall activities and adjustment to vehicle depreciation rate that impacted the results unfavorably. These factors resulted in a significant downward revision in EBITDA for fiscal year 2016.

In a note, the brokerage said, “We expect this update to weigh heavily on shares, and believe a miss of this magnitude was largely unexpected. Furthermore, this update may cast significant doubts around the company's go forward margin targets as had been shared last November at its analyst day.”

Credit Suisse wanted the company to throw more lights on the following four factors:

  • Factors behind the soft volume growth in RAC.
  • Additional color on the adjustment of depreciation on fleet.
  • A comparison of the previous EBITDA to the revised guide.
  • Impact of fleet in the upcoming period from smaller/mid-size vehicles.

The brokerage noted that Hertz missed its estimations on adjusted EBITDA, revenue, US RAC. The firm noted that the company slashed its revenue, EBITDA and EPS forecast for the year 2016.

At last check, Hertz shares tanked 29.16 percent to $25.32.

Latest Ratings for HTZ

DateFirmActionFromTo
Jun 2018Morgan StanleyMaintainsUnderweightUnderweight
Jan 2018MacquarieUpgradesNeutralOutperform
Nov 2017Morgan StanleyMaintainsUnderweight

View More Analyst Ratings for HTZ
View the Latest Analyst Ratings

Posted-In: Credit SuisseAnalyst Color Reiteration Analyst Ratings Best of Benzinga

 

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