Microvast Holdings announces departure of chief financial officer
On Monday, Citi initiated coverage of Herc Holdings (NYSE: NYSE:HRI), a prominent equipment rental company, with a Buy rating and a price target set at $165. Currently trading at $135.61, InvestingPro analysis suggests the stock is slightly undervalued, with analyst targets ranging from $129 to $294. The positive outlook is based on the anticipated acquisition of H&E Equipment Services, which Citi analysts believe offers attractive upside potential. Despite uncertainties in the near-term macroeconomic landscape, Citi’s analysis suggests that Herc Holdings is well-positioned to benefit from synergies resulting from the deal and from robust demand for large-scale projects.
The firm’s analysts are optimistic about Herc Holdings’ potential to enhance earnings and expand margins, supported by the company’s ability to leverage the acquisition for growth. They consider the current valuation of Herc Holdings’ stock to be appealing and suggest that there is a strong case for an increase in the company’s multiple as it realizes synergies from the acquisition and reduces debt incurred from the transaction over the coming years.
Citi’s projection for Herc Holdings includes a positive earnings trajectory into 2028, factoring in the H&E Equipment Services acquisition and expected synergy realization. This forecast underpins their recommendation and the $165 price target for the company’s shares. The analysis by Citi reflects confidence in Herc Holdings’ strategic moves and its capability to outperform in a challenging macro environment.
In other recent news, Herc Holdings Inc. reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $3.58, which fell short of the projected $3.94. Despite this, the company exceeded revenue expectations, reporting $951 million, which led to a positive market response. Herc Holdings has also entered into a definitive agreement to acquire H&E Equipment Services Inc. for $5.5 billion, a move expected to enhance its presence in the North American equipment rental market. This acquisition will be funded by approximately $4.5 billion in debt and $1 billion in common stock issuance, contributing to a revised negative outlook from S&P Global due to anticipated increased leverage. Moody’s Ratings has also deemed the acquisition credit negative, although it maintained Herc’s Ba2 corporate family rating and stable outlook. The merger agreement with H&E Equipment Services, valued at $104.89 per share, is anticipated to achieve significant synergies, although it presents integration risks. Analysts from Barclays (LON:BARC) have expressed optimism about the acquisition, viewing it as a strategic move to gain scale in a competitive market.
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