Avis (NASDAQ:CAR) shot higher Tuesday after Morgan Stanley said to buy the stock and that there could be a higher floor for the business going forward.
Analyst Adam Jonas upgraded the budget rental car company to overweight from equal rate and hiked his price target to $230 from $182. Jonas’ new target implies the stock could rise 12.6% in the next year.
“With the backdrop of normalization in the rental industry, we look for operational execution to preserve what could now be a higher floor for the industry,” Jonas said in a note to clients Tuesday.
Avis Budget is noted to have a history of being able to extract higher revenue in comparison to rival Hertz Global, as well as generate lower costs and subsequently higher margins from their operations.
Morgan Stanley assigned a new base case price target of $230 on Avis Budget, which is 8.0X the firm’s FY24 EBITDA estimate. The MS bull case price target on CAR is $350.
Avis Budget Group, Inc. is a provider of vehicle rental and car sharing services. The Company’s segments include Americas and International. The Americas segment provides and licenses the Company’s brands to third parties for vehicle rentals and ancillary products and services in North America, South America, Central America, and the Caribbean, and operates the Company’s car sharing business in markets.
CAR shares opened better $15.45, or 7.6%, Tuesday at $219.74.