BOJ keeps interest rates flat, but flags rate hikes on rising inflation, GDP
On Friday, Goldman Sachs adjusted its outlook on Avis Budget (NASDAQ:CAR) Group shares, reducing the price target from $100 to $87 while maintaining a Neutral rating. With the stock currently trading at $101.09, significantly above Goldman’s target, and analyst targets ranging from $100 to $145, investors might benefit from InvestingPro’s comprehensive analysis of Avis Budget’s valuation metrics. Lizzie Dove, an analyst from Goldman Sachs, cited a mix of positive and negative takeaways from the company’s earnings report, leading to a more cautious stance.
Dove noted that despite the Department of Energy’s performance being a positive aspect, two main concerns prompted the revision. Against the backdrop of $11.67 billion in revenue and $906 million in EBITDA over the last twelve months, Avis Budget’s projection for second-quarter Americas Revenue Per Day (RPD) to increase sequentially as per usual seasonal patterns suggests a steeper year-over-year decline for the second quarter compared to the first. Dove’s analysis anticipates a 3.8% year-over-year decrease. Secondly, after adjusting for an approximately $56 million gain on sale recorded after a write-down, the company’s first-quarter EBITDA fell short of Goldman Sachs’ estimates.
The reassessment of the potential benefits from tariffs led to a reduction in the expected gains on sale by roughly one-third. This adjustment reflects a more conservative estimate of the flow-through benefits and aligns with Avis Budget’s fleet composition, which leans more towards domestic rather than international vehicles. Consequently, Goldman Sachs now projects Avis Budget’s adjusted EBITDA for 2025 to be $907 million, which is contingent on further evidence of pricing trends.
In summary, while recognizing some positive elements in Avis Budget’s recent earnings, Goldman Sachs awaits additional data on pricing trends before revising its stance. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with high price volatility being a key characteristic. As a result, the firm has opted to lower the price target and remain neutral on the stock. Discover 13 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
In other recent news, Avis Budget Group reported a challenging first quarter of 2025, with earnings per share (EPS) of -$14.35, significantly missing the forecast of -$5.34. Revenue also declined to $2.4 billion from $2.5 billion in the previous year. Despite this, Avis Budget’s adjusted EBITDA loss of $93 million was better than expected, thanks to favorable vehicle depreciation trends and aggressive fleet updates. Analysts at JPMorgan raised their price target for Avis Budget shares to $155, highlighting the company’s better-than-expected EBITDA, while Jefferies increased their target to $117, citing stable demand trends and effective fleet management. Avis Budget reiterated its goal to achieve an annual EBITDA of at least $1 billion, despite not providing explicit guidance due to macroeconomic uncertainties. The company’s CEO, Joe Ferraro, announced his retirement, adding to the strategic uncertainties. Analysts and investors continue to monitor the company’s performance, particularly in relation to used vehicle values and interest rates, which are seen as key factors influencing future earnings.
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