Hertz's New CEO At The Helm: What's In Store For The Company?

Credit Suisse is bit surprised with Hertz Global Holdings, Inc HTZ’s CEO change announcement and is wondering whether the management change is a solution to its problems.

A Continuation Of A Trend

The Estero, Florida-based rental car company named Kathryn Marinello as new CEO, replacing John Tague effective January 3. Concurrently, the company also announced the departures of three of its directors, Linda Levinson, Carl Berquist and Michael Durham, effective January 2.

Marinello will be the third CEO at Hertz in about two years. Tague was appointed on November 21, 2014. Such frequent top management changes may lead to investor anxiety and loss of shareholder confidence

Analyst Commentary

“While Ms. Marinello's background (CEO of Stream, a BPO company, as well as CEO of Ceridian, and CEO of various GE businesses) is certainly impressive, it has less of an operations bent than we would have preferred,” analyst Anjaneya Singh wrote in a note.

Singh, who has a Neutral rating on the Hertz stock, believes the ideal successor should have industry specific experience, or with a related background as Tague's airline/seats capacity management background at United had been.

The analyst also wondered whether Hertz’s struggles are really attributable to Tague. The analyst believes Tague had inherited a company with significant issues and “may have not fully appreciated the complexity of the turnaround required.”

“We had always liked Mr. Tague's operational acumen and background and we believe he was a key player in bringing some fleet supply discipline to the rental car industry during his tenure,” Singh added.

Shares of Hertz closed Tuesday’s trading at $25.13, while Singh has a price target of $27. In the pre-market hours Wednesday, the stock fell 4.30 percent to $24.05.