Hertz Ratings Dip

A Banc of America analyst recently downgraded car rental operator Hertz Global Holdings Inc. to "Neutral" from "Buy", citing a dip in used vehicle resale values.

Analyst Jairam Nathan also cut his 2008 earnings forecast to $1.40 per share from $1.60 per share, and lowered his price target to $20 from $27.

In November, used vehicle prices fell 1 percent for the second month in a row. Hertz has a high exposure to these prices, as it is affected more by depreciation costs than cost reductions or pricing, he said.

For every 1 percent decline in American used car prices, Hertz's earnings could fall 7 cents per share, Nathan said, noting that he expects used car prices to dip 1 percent a year for the next two years. That estimate could be conservative, as used car prices have fallen 5 percent to 10 percent in past recessions, he said.

Shares closed Tuesday at $16.46.

Comment On This Story

Name:  
Email:  
Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.

 
 

Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

Auto Manufacturers: Mobility Disruptors or Fleet Providers?

Maven’s Alex Keros shares insights into evolving smart mobility business models and new opportunities with fleet management.

What is Your Time Worth?

Personal observations of retail and travel transactions reveal just how much a consumer’s time is worth today, and how increasingly intolerant we are of inefficient transactions.

Safeguarding Your Business with Brokers

While the high-profile bankruptcy of Atlas Choice has left many car rental companies wary of working with brokers, rental companies can take steps to protect themselves and ensure a productive relationship.

Job Finder: Access Top Talent. Fill Key Positions.

>