Bank of America Securities analyst Sherif El-Sabbahy reiterated a Sell rating on Herc Holdings (HRI – Research Report) yesterday and set a price target of $100.00.
Sherif El-Sabbahy’s rating is based on several concerning factors regarding Herc Holdings. The company’s recent performance, particularly in the general rental market, has shown signs of weakness. This is evident from the year-over-year decline in rental metrics and revenue, with a notable drop in time utilization and dollar utilization. These indicators suggest a deteriorating rental environment, compounded by weak local demand and the impact of a merger announcement that has pressured performance.
Additionally, Herc Holdings faces significant financial challenges. The company’s leverage is expected to increase substantially following the H&E transaction, rising from 2.5x to 3.8x, which is above the typical target range. Furthermore, the financing costs for the acquisition are likely to be higher than initially anticipated due to volatile bond markets, which could strain cash flow. These financial pressures, combined with a slowing construction cycle, contribute to the Sell rating as they pose risks to the company’s future performance.
HRI’s price has also changed dramatically for the past six months – from $210.860 to $107.600, which is a -48.97% drop .