Market Overview

Buckingham Upgrades United Rentals, Herc Holdings On Encouraging Sector Trends

Buckingham Upgrades United Rentals, Herc Holdings On Encouraging Sector Trends
50 Biggest Movers From Tuesday
80 Biggest Movers From Yesterday
Related URI
Benzinga's Top Upgrades, Downgrades For December 14, 2018
Citigroup, EA, Intel, United Rentals: 'Fast Money' Picks For November 7

Herc Holdings Inc (NYSE: HRI) and United Rentals, Inc. (NYSE: URI) picked up a sell-side upgrade Friday on projections of higher equipment rental rates. 

The Analyst

Buckingham Research Group's Neil Frohnapple upgraded United Rentals and Herc Holdings from Neutral to Buy. Buckingham has a $180 price target for United Shares and $70 price target for Herc shares.

The Thesis

Buckingham's eighth consecutive monthly equipment rental rate momentum survey painted a bullish view of rental rates, Frohnapple said in the Friday upgrade note. (See the analyst's track record here.) 

"Over two-thirds of contacts noted that rates were above their expectations in the month of June, which marked the highest number of respondents citing above rental rate performance since we commenced this survey publication," the analyst said. "Additionally, 100 percent of contacts we surveyed revealed that their outlook for rental rates over the next 12 months improved versus 30 days ago." 

Consequently, Frohnapple expects the progression of rental rates to be higher than initially expected for both 2018 and 2019.

United Rentals, the largest equipment rental company in the world, will likely prosper based on this data, Frohnapple said. While the company functions in a very specific market, improving rental growth will only continue to build up United's rapport and trust, he said.

"We also think the company’s scale and rapid expansion of its specialty business are underappreciated aspects of the United Rentals story, which should continue to drive higher cycle-over-cycle returns,” said Frohnapple.

Fronhapple expects Herc to thrive the most from the trends identified in Buckingham's survey. The company should develop rental rate revenue faster than the industry  as a whole this year and has instituted pertinent business plans, the analyst said. 

“The company has also significantly expanded its sales force over the last twenty four months in part to support the increase in its urban market density and should start to experience improved leverage from these hires.”

Price Action

Herc shares were up 4.14 percent at $59.67 at the close Friday. United Rentals was up 1.65 percent at $154.83 at the close.

Related Links:

Bank Of America Lowers Industrial Machinery Price Targets Across The Board

Used Truck Prices Continue Strong In May, Equipment Supply Remains Tight

Latest Ratings for HRI

Jul 2018BuckinghamUpgradesNeutralBuy
Apr 2018Goldman SachsDowngradesNeutralSell
Feb 2018RBC CapitalInitiates Coverage OnOutperform

View More Analyst Ratings for HRI
View the Latest Analyst Ratings

Posted-In: Buckingham Research Group Neil FrohnappleAnalyst Color Upgrades Price Target Crowdsourcing Analyst Ratings General Best of Benzinga


Related Articles (URI + HRI)

View Comments and Join the Discussion!

Latest Ratings

CNPRBC CapitalUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

China ETFs: Buy The Dip?

L Brands Loses 14% On Dull Showing From Victoria's Secret