Thu Sep 19 08:06:19 UTC 2024: ## Hertz Faces Headwinds: Barclays Issues Underweight Rating, Forecasting Continued Stock Decline

**New York, NY** – Barclays has initiated coverage on Hertz Global (HTZ) with an **Underweight rating** and a price target of **$3.00**, citing a series of challenges facing the car rental company. The firm is concerned about Hertz’s extensive fleet overhaul, which includes replacing a significant number of vehicles with electric vehicles (EVs) and updating its systems.

Barclays highlights that Hertz is currently struggling with its earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow (FCF). While some improvement is expected next year, potentially bringing EBITDA to breakeven, liquidity concerns remain a key issue. The firm anticipates that Hertz will likely require additional funding in the coming years to sustain its operations.

The ongoing fleet and system upgrades, coupled with these financial challenges, are expected to weigh on Hertz’s performance in the near term. As a result, Barclays believes the stock will continue to face downward pressure.

Despite these concerns, Hertz has recently expanded its Board of Directors, appointing former Home Depot CEO, Mr. Francis Frank Blake, and Ms. Lucy Clark Dougherty from Polaris Inc., as part of its strategy to bolster leadership.

The company also reported Q2 revenue of $2.4 billion and an adjusted corporate EBITDA loss of $460 million. However, it maintains a strong liquidity position with $1.8 billion available at the end of Q2.

Following these developments, Morgan Stanley has lowered its price target on Hertz to $7.00, maintaining an Equalweight rating, while JPMorgan has reduced its price target from $6.00 to $5.00, also maintaining a neutral rating.

Hertz is currently focusing on strategic priorities, including fleet rotation, revenue growth, and cost management, as part of its business transformation plan set to be completed by the end of 2025.

However, challenges with the company’s electric vehicle initiative have led to losses exceeding $500 million, according to JPMorgan.

Overall, the recent news indicates a mixed picture for Hertz. While the company is taking steps to improve its financial position and leadership, the challenges associated with its fleet overhaul and EV initiative are weighing on its performance and are likely to continue to impact its stock price in the near term.

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