Opportunity for Hertz Global Holdings to expand: analyst
Hertz Global Holdings Inc. is in a position to strengthen its status as a top car rental service at airports by expanding in other profitable markets, says an analyst. (1/5/2007)
According to AP, Deutsche Bank analyst Bill Lerner, who initiated coverage of the Park Ridge, N.J.-based company with a “Buy” rating," said Hertz benefits from strong market leadership and sustainable competitive advantages.
According to the report, only 1,420 of Hertz’s 7,600 outlets are away from airports, and Lerner believes the company can raise its 11 percent share of the $10 billion off-airport car rental market, which primarily serves insurance companies temporarily replacing damaged or stolen cars. Also, Hertz has just a four percent market share of the fractured equipment rental industry, Lerner reportedly said. With non-residential construction forecast to moderate but continue growing, Hertz has a chance to earn more money in the $31 billion sector, he said.
“Hertz, which went public in November at $15 per share, faces little threat as the top company renting cars to travelers at airports, Lerner said. It’s difficult to obtain a license to operate a car rental agency at an airport, Lerner said, so Hertz’s 29 percent market share in the industry is safe. Lerner’s $21 price target on Hertz is nearly 22 percent higher than the stock’s close of $17.28 Wednesday on the New York Stock Exchange. With a market value of $5.54 billion, Hertz had earnings of $350 million on $7.47 billion in revenue in 2005,” reported AP.