Hertz Global (HTZ – Research Report), the Industrials sector company, was revisited by a Wall Street analyst yesterday. Analyst Adam Jonas from Morgan Stanley reiterated a Hold rating on the stock and has a $3.00 price target.
Adam Jonas has given his Hold rating due to a combination of factors impacting Hertz Global’s current and future prospects. The recent acquisition of a significant stake by Pershing Square has driven up the stock price, but the overall business faces substantial operational challenges and a high level of debt. The company’s adjusted corporate EBITDA and free cash flow are projected to be just above break-even, with net leverage remaining high through the forecast period.
Additionally, while there is potential hidden value in Hertz’s vehicle fleet, the fluctuating market value and risks associated with unsold vehicles, such as Teslas, pose uncertainties. The international operations, though generating rental revenue, lack synergies with the Americas fleet, limiting potential efficiencies. Despite being somewhat insulated from international trade tensions, a broader economic slowdown could negatively impact Hertz’s core business. Lastly, while there is speculative strategic value in the context of AI and autonomous vehicles, these remain long-term considerations rather than immediate catalysts.
Based on the recent corporate insider activity of 37 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HTZ in relation to earlier this year.