Hertz Global (HTZ – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst John Babcock from Bank of America Securities maintained a Sell rating on the stock and has a $2.70 price target.
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John Babcock’s rating is based on Hertz Global’s current financial challenges and market conditions. The company is exploring various financing options, including raising $500 million through secured debt and potentially an at-the-market equity offering, to fund ongoing operations and a significant litigation payment. Despite these efforts, Hertz’s free cash flow usage remains high, with forecasts indicating substantial negative cash flow in the coming years. Additionally, macroeconomic uncertainties and signs of waning travel demand pose further risks to the company’s financial stability.
Furthermore, Babcock suggests that while an equity offering might be preferable to increasing debt, it comes with its own set of challenges, such as potential shareholder dilution and increased vulnerability to short selling. The company’s existing debt levels are already elevated, with significant interest expenses projected. Given these factors, Hertz may need to pursue both debt and equity financing to meet its capital needs, but the timing is unfavorable due to declining travel demand and economic uncertainty. These combined issues contribute to the Sell rating on Hertz Global’s stock.
Based on the recent corporate insider activity of 33 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.