Hertz, Avis Budget Initiated with ‘Neutral'

Analysts at UBS initiate coverage of Hertz Global Holding and Avis Budget Group with a "neutral" rating. Hertz’s 12-month target price is set to $19, while Avis Budget’s is set to $14.

In a research note recently published, the analysts mention that the rental car companies, including Hertz Global and Avis Budget, are facing significant near-term challenges due to moderating business travel trends and reduction in airline capacity.

Both Avis Budget and Hertz Global Holdings’ cash flows could come under pressure going forward, with the company moving away from program vehicles and relying on reselling, the analysts add. An improvement in sentiment regarding the U.S. economy might lend upside to the companies’ growth prospects going forward, UBS says.

As of April 2, 2008, Hertz Global Holdings’ shares were trading at $12.75, while Avis Budget’s were $11.85.

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