Car rental company Hertz Global Holdings HTZ saw shares trade higher Tuesday after reporting quarterly financial results. Here’s what one analyst has to say about the results and how electric vehicles could be helping the company.
What Happened: Hertz Global reported fourth quarter revenue of $2.04 billion, which was up 4% year-over-year.
Deutsche Bank analyst Chris Woronka maintains a Buy rating and lowers the price target from $29 to $27 after the earnings report.
The analyst said there was “no aha moment” from the company’s 2023 outlook, but the fourth quarter report showed that “good is good.”
“We view today’s strength in HTZ partially as a relief rally in response to management’s generally benign outlook on fleet costs for 2023,” Woronka said.
Woronka said the fourth quarter report shows the company de-risked on what could be the single most important metric in fleet costs.
“While booking windows remain, historically narrow (thus leaving a wide range of possibilities for how the year will ultimately unfold), we view commentary around current operating trends as quite positive.”
The analyst sees Hertz recapturing some market share in 2023 and calls the stock one of “the most attractive ways” to play growth in the travel industry.
Related Link: Why Hertz & Uber Are About To Flood Europe With Tesla And Polestar EVs
What’s Next: Along with fourth quarter financial results, Hertz is pushing for more growth coming from the expansion of its electric vehicle units, according to Teslarati.
This comes after record revenue of $8.7 billion in fiscal 2022.
Teslarati calls Hertz a “clear leader in electrification in the car rental market,” which could help the company gain market share in the space.
“Our team delivered on renewed demand for travel, which is continuing. In 2023, we will build on our progress to grow our business across the Hertz, Dollar, and Thrifty brands. We look to our investment in electrification and technology to yield increasing operating leverage and improved returns and an even better product to our customers around the world,” Hertz CEO Stephen Scherr said.
The comments from Scherr come after Hertz made headlines in 2021 announcing the purchase of 100,000 Tesla Model 3s from Tesla Inc TSLA. Hertz has not received all the Tesla vehicles it ordered as part of the 100,000 unit deal, according to reports.
Hertz isn’t stopping with market leader Tesla when it comes to the acquisition of EVs. The company also has deals in place to buy electric vehicles from General Motors Company GM and Polestar PSNY. Hertz also partnered with BP Pulse to add charging infrastructure at Hertz rental locations.
The earnings presentation from Hertz said the company would continue to add to its electric vehicle fleet with deals from multiple OEMs, without naming specific companies.
Hertz also has a partnership with Uber Technologies UBER to offer a discounted weekly rental fee on electric vehicles to Uber drivers.
The electric vehicle initiatives appear to be paying off for Hertz with record revenue in 2022. Operating costs could also be improved with increased usage of electric vehicles, which investors shouldn’t overlook.
Interest in renting electric vehicles has risen as people are searching for this option at an increasing rate on vacations and as they leave their home states for work. Hertz could continue to gain market share and dominate the EV rental segment until others catch on.
After a record 2022, Hertz could see a record in 2023 with the additional deliveries of more EVs from partners.
HTZ Price Action: Hertz shares trade at $19.00 on Wednesday, versus a 52-week trading range of $14.49 to $24.35.
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