Bank of America raises target on Herc Holdings to $115, maintains underperform rating

BofA Securities revised its outlook for Herc Holdings (NYSE: ) on Wednesday, raising its price target to $115 from $110 while maintaining an “underperform” rating on the stock. The revision follows Herc's first-quarter results, which the company said beat consensus estimates but were slightly below BofA Securities' expectations. The company's core performance, excluding Cinelease's contribution, was slightly below consensus forecasts.

Herc Holdings reported total revenue of $774 million, excluding Cinelease, 1% below consensus estimates. Adjusted EBITDA (excluding Cinelease's $10 million contribution) was $329 million, also slightly below the consensus of $333 million. Although its core business missed expectations, the company grew 5.1% annually in the first quarter and expects normal seasonal growth for the rest of the year.

The company highlighted that Herc Holdings' first-quarter results showed resilience, with growth rates accelerating sequentially throughout the quarter. On the back of increased visibility, the company reiterated its outlook for 2024. Herc Holdings is actively expanding its business. In the first quarter, it spent US$148 million on mergers and acquisitions, adding 11 new stores and adding 4 new stores.

While BofA Securities acknowledged the positive aspects of Herc's performance and remained optimistic about the leasing market, it preferred United Rentals (NYSE: ), which has a higher investment rating than Herc Holdings, citing a more favorable free cash flow profile.

Investment Professional Insights

When discussing Herc Holdings (NYSE: HRI ) recent performance and future prospects, real-time data and InvestingPro Tips provide a deeper look into the company's financial health and market position. Herc Holdings has a market cap of $4.32 billion, a price-to-earnings ratio of 12.66, and its valuation is closely tied to its recent earnings growth, with a PEG ratio of 1.73. The company's revenue grew nearly 15% in the past 12 months through the first quarter of 2024, demonstrating its ability to expand in the face of market challenges.

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InvestingPro Tips highlights that Herc Holdings has increased its dividend for three consecutive years, demonstrating its commitment to returning value to shareholders. Additionally, the stock has experienced significant gains over the past six months, returning 46.5%, reflecting investor confidence in the company's trajectory. However, it's worth noting that the stock exhibits higher volatility, which may be a consideration for risk-averse investors. For those interested in learning more, there are additional InvestingPro Tips available that can provide further guidance on the investment potential of Herc Holdings.Use coupon code PRONEWS24 Get these insights with an additional 10% discount on annual or bi-annual Pro and Pro+ subscriptions.

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