Analyst Sherif El-Sabbahy from Bank of America Securities maintained a Sell rating on Herc Holdings (HRI – Research Report) and keeping the price target at $155.00.
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Sherif El-Sabbahy has given his Sell rating due to a combination of factors impacting Herc Holdings. The acquisition of H&E Equipment Services has been priced at a premium, and the deal comes at a time when the construction industry is experiencing a downturn. This acquisition is expected to increase Herc’s leverage significantly, raising concerns about the company’s financial stability in the short term.
Additionally, the proposed synergy targets appear to be aggressive, with potential challenges in achieving the cross-selling goals set by Herc. The execution risk associated with integrating H&E Equipment Services into Herc’s operations is considerable, especially given Herc’s mixed track record in achieving similar targets in the past. As a result, El-Sabbahy remains cautious and retains a Sell rating, preferring alternatives like United Rentals in the rental sector for better visibility and stability.
HRI’s price has also changed moderately for the past six months – from $136.360 to $178.890, which is a 31.19% increase.