UBS lifts United Rentals stock rating, target to $780 from $485

On Friday, UBS analyst Steven Fisher upgraded United Rentals (NYSE:URI) stock to Neutral, significantly raising the price target to $780 from the previous $485. Currently trading at $713, the stock appears slightly overvalued according to InvestingPro analysis. The upgrade reflects Fisher’s assessment of the company’s ability to maintain modest total EBITDA growth despite challenges in the non-residential market.

United Rentals has been focusing on diversification and specialty services to create a robust business model capable of withstanding slower market conditions. The strategy appears to be working, with InvestingPro data showing strong financial health metrics and a 39.9% gross profit margin. According to Fisher, the company’s strategy of launching new locations, referred to as "cold starts", and pursuing acquisitions has positioned it well for sustainable cash flow and a solid financial standing.

Fisher’s comments highlighted that the current stock price now adequately reflects the anticipated modest growth along with potential gains from inorganic strategies. With analyst targets ranging from $485 to $1,225, the market remains divided on URI’s potential. The UBS analyst has maintained the existing estimates for United Rentals, expecting an improvement in organic growth by 2026 after a slower growth period in 2025.

The forecast for United Rentals suggests approximately 3% year-over-year growth in EBITDA for the second to fourth quarters of 2026, which is an upturn from an estimated 3% decline in the preceding three quarters. With current EBITDA at $4.5 billion and revenue growth of 7.2% in the last twelve months, this outlook is based on the company’s execution strength and strategic steps to mitigate the impact of a softer non-residential market on their same-store general rental revenue. For deeper insights into URI’s financial health and growth prospects, explore the comprehensive Pro Research Report available on InvestingPro.

In other recent news, United Rentals reported its first-quarter 2025 earnings, revealing a strong performance with total revenue exceeding expectations. The company achieved a revenue of $3.72 billion, surpassing the forecast of $3.61 billion, driven by robust growth in rental and specialty services. Despite this, the adjusted earnings per share (EPS) came in at $8.86, slightly below the projected $8.96. The rental revenue hit a record of $3.1 billion for the first quarter, marking a 7.4% increase from the previous year. Additionally, United Rentals’ adjusted EBITDA margin improved to 44.9%, with EBITDA reaching $1.7 billion. The firm also announced plans to open at least 50 new specialty branches throughout the year, aiming to maintain its growth momentum. Analyst firms like Evercore ISI have inquired about the company’s specialty rental growth strategy, and management has emphasized their expansion plans and focus on maintaining strong margins. Furthermore, United Rentals plans to return approximately $2 billion to shareholders, underscoring its strategic focus on expansion and shareholder value.

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