Market Overview

Avis, Hertz Provide Glimpses Into The Car Rental Space Of An Autonomous Future

Share:
Avis, Hertz Provide Glimpses Into The Car Rental Space Of An Autonomous Future
Related HTZ
Congressional Committee Meets To Iron Out State, Federal Rules For Self-Driving Cars
Hertz Shares Up 80% In 17 Days; Analysts Break Down Industry Trends
Related CAR
Benzinga's Option Alert Recap From July 12
Benzinga's Option Alert Recap From July 11
Avis Budget Group to Announce Second Quarter —…–7 Results on August 7 (GuruFocus)

It’s not just Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) that could see major changes to their businesses at the dawn of the automated-vehicle era. According to new reports, car rental companies Avis Budget Group Inc. (NASDAQ: CAR) and Hertz Global Holdings, Inc (NYSE: HTZ) may be picking sides as they position themselves for a driverless future.

Avis recently announced a multiyear partnership with Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)’s Waymo driverless car unit. Bloomberg has also reported that Hertz is working with Apple Inc. (NASDAQ: AAPL) to test driverless car technology.

Though the partnerships will not have any meaningful immediate financial impact, they should come as welcome news to Avis and Hertz investors, MKM Partners analyst Christopher Agnew says. These deals suggest rental companies have a future in a driverless world and will not become obsolete within 5-10 years, Agnew says. Instead of rental car companies becoming less relevant, he believes they will become even more relevant.

“We believe a large under-appreciated asset for the car rental companies are its fleet management and logistical capabilities as well as its broad geographic footprint, particularly its airport locations,” Agnew wrote on Tuesday (see Agnew's track record here).

“Between traditional on-airport car rental, off-airport rentals, car sharing (Zipcar, Enterprise Car share) and corporate fleet management (Donlen and Enterprise Fleet Management), the car rental industry has broad expertise across different types of fleet management.”

Related Link: 2 Stocks In The Struggling Rental Car Sector Are Surging This Week

Agnew noted that Avis is also expected to begin a connected car pilot by the end of July as part of the company’s long-term margin expansion initiative. The pilot is intended to help the company optimize a wide range of measures, including gas measurement and preventative maintenance.

MKM maintains a Buy rating for Avis, Hertz and Alphabet with price targets of $40, $22 and $1170, respectively.

At last check, shares of Avis were down 6.14 percent at $25.97, while shares of Hertz were down 0.83 percent at $10.75.

_________
Image Credit: By Michael Rivera (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Latest Ratings for HTZ

DateFirmActionFromTo
Feb 2017Credit SuisseDowngradesNeutralUnderperform
Nov 2016Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2016Northcoast ResearchDowngradesBuyNeutral

View More Analyst Ratings for HTZ
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Reiteration Travel Analyst Ratings Movers Tech Best of Benzinga

 

Related Articles (AAPL + CAR)

View Comments and Join the Discussion!