Morgan Stanley analyst Adam Jonas upgraded Hertz (HTZ) to “overweight” following the rental car company's decision to sell 20,000 electric vehicles in its fleet. raised its price target to $15 per share.
“HTZ's aggressive EV strategy has exacerbated significant challenges in both fleet costs and operating costs per unit, resulting in a significant setback to consensus expectations,” Jonas said in a note to clients. “We believe the measures announced last week will drive a significant negative revision for FY24.” It helps drive the decline in stock prices and reduces long-term risks to stock prices. ”
Yahoo Finance Live co-hosts Seana Smith and Brad Smith discuss upgrades.
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Editor's note: This article was written by luke carberry morgan.
Sheena Smith: Let's take a look at one of the tickers trending here this morning. And that's Hearts. It has only increased by about 6%. Shares are up more than 7% in early trading. Here, the stock is rallying on the back of a bullish call from Morgan Stanley.
Adam Jonas, who is upgrading his stake in the car rental company, recently decided to sell 20,000 EV vehicles here, including some Teslas, in favor of gas-powered vehicles. Brad and I talked about it here just a few days ago.
But we take a look at this call and see exactly why he's a little optimistic, and why Hertz is taking decisive action to address some of the challenges its large EV fleet has created for itself. He claims that he is starting to take. As a result, he said that while risks remain, he believes further forward projections are well below the firm's normalized earnings expectations, which could support an upgrade here.
That's reflected in the stock price today, Brad, and the stock price increase is only about 6.5%.
Brad Smith: Yeah. He goes on to detail what the travel environment actually looks like, the demand for these EVs and where that will change. However, Dido said U.S. consumer and travel trends, strong TSA passenger data to start the year, the airline team's 2024 outlook on resilient travel, and trends are supportive. Ta. They are beneficial to the continued rise in rental demand there.
So perhaps the inevitable difference between the number of people who need to get on a plane and rent a car once they arrive, and the number of people who are probably just planning a weekend excursion for all the weekend warriors out there. This is the result.
So ultimately, from an EV perspective, it's going to be a bigger question of how much can you unload the many vehicles you've taken on.
Sheena Smith: And again, this $15 price target from Morgan Stanley looks like 90%, 85% upside from the current price. Certainly a name to keep an eye on.