Car rental company Hertz’s stock downgraded at JPMorgan and Deutsche Bank

Hertz Global Holdings (HTZ) stock received two rating cuts today, with both JPMorgan and Deutsche Bank moving to the sidelines.

Analysts at JPMorgan downgraded the car-rental company’s recommendation from overweight to neutral.

They expressed concerns about the lack of near-term positive catalysts and reduced its estimates, citing a deterioration in underlying earnings in the fourth quarter and its potential implications for 2024.

“While the stock arguably trades inexpensively on normalized out-year earnings (our estimate of which has not declined commensurately with the stock price), we see few near-term positive catalysts on the horizon after reducing our estimates,” analysts said.

As such, they now expect “Hertz in 2024 to neither grow earnings (after excluding the one-time charge in 4Q23) nor to generate positive free cash flow, suggesting little potential also to capitalize upon a lower stock price via share repurchases.”

Similarly, analysts at Deutsche Bank cut the rating to Hold from Buy. They made a ratings swap as they upgraded Avis Budget Group (NASDAQ:) to Buy while cutting HTZ.

“Simply put, we see an unreasonably wide risk/reward disconnect between the two stocks here. We also believe HTZ’s well-chronicled EV strategy, which recently pivoted to include the sale of one-third of the fleet, leaves investors with little conviction in the company’s true run rate earnings power over the next few years,” analysts wrote in a note.

HTZ was also downgraded last week at Jefferies.

HTZ stock fell 1% in early Thursday trade while CAR added 3.3%.