BOJ keeps interest rates flat, but flags rate hikes on rising inflation, GDP
On Friday, Jefferies analyst Stephanie Moore increased the price target for Avis Budget Group (NASDAQ:CAR) shares to $117 from the previous target of $107, while reiterating a Buy rating on the stock. Currently trading at $101.09, the stock has shown strong momentum with a 25.41% gain year-to-date. The adjustment followed Avis Budget’s first-quarter earnings report, which revealed an EBITDA that surpassed expectations, largely due to reduced fleet costs resulting from the company’s aggressive fleet update during the quarter.
The analyst noted that despite an uncertain demand outlook, current trends seem stable. With an EBITDA of $906 million and annual revenue of $11.67 billion, Moore commended the management team at Avis Budget for their consistent ability to manage the fleet effectively and drive operational improvements that contribute to the company’s financial performance. According to InvestingPro, the company maintains a FAIR financial health score, with particularly strong marks in price momentum and relative value metrics.
Moore also mentioned that any uptick in used vehicle values, combined with a lower interest rate environment, could further enhance the company’s earnings. The positive sentiment from Jefferies comes as a reflection of the company’s strong performance in the face of industry challenges.
The report by Jefferies highlights Avis Budget’s strategic moves in updating its fleet, which have proven beneficial in terms of cost savings. The company’s adept management of its assets and operations has positioned it well to potentially leverage favorable market conditions in the future.
Investors and market watchers will continue to monitor Avis Budget Group’s performance, particularly regarding used vehicle values and interest rates, which have been identified as key factors that could influence the company’s earnings moving forward. Analyst targets currently range from $95 to $145, reflecting diverse market opinions. For deeper insights into Avis Budget Group’s valuation and growth prospects, InvestingPro offers comprehensive analysis through its detailed Pro Research Report, available along with 13 additional ProTips for this stock.
In other recent news, Avis Budget Group reported disappointing financial results for the first quarter of 2025, with earnings per share (EPS) falling significantly below expectations. The company announced an EPS of -$14.35, missing the forecasted -$5.34, and revenue decreased to $2.4 billion from $2.5 billion in the same period last year. This performance was attributed to factors such as calendar shifts and a decline in commercial volume, coupled with a 2% drop in pricing. Additionally, Avis Budget Group’s CEO, Joe Ferraro, announced his retirement, effective June 30. Despite these challenges, the company remains optimistic, targeting an annual adjusted EBITDA of at least $1 billion and expecting Q2 adjusted EBITDA to exceed $200 million. Analysts from firms like Susquehanna and Bank of America have noted these developments, with some expressing concerns about the company’s ability to meet future financial targets. Meanwhile, Avis Budget Group is focusing on strategic initiatives, including fleet management improvements and technology investments, to enhance operational efficiency and customer experience.
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