Morgan Stanley Upgrades Hertz as Rental Company Addresses EV Challenges
In a recent development, Hertz Global has received an upgrade from Morgan Stanley, with the investment firm raising its rating to Outperform from Equal-Weight. However, while this upgrade is positive news for Hertz, Morgan Stanley did lower its 12-month price target to $15.00 from $16.00. The upgrade comes as Hertz announced its plans to add 20,000 Tesla units to its global EV fleet, a move aimed at addressing the challenges the rental company has faced with its electric vehicle strategy.
According to analysts at Morgan Stanley, Hertz’s decision to take action in addressing the challenges resulting from its large EV fleet is commendable. The company’s bold EV strategy has come with its fair share of difficulties, including increased fleet costs and operating expenses. These challenges have led to significant cuts in consensus expectations, which have negatively impacted Hertz’s financial outlook.
Despite the downward revision in the company’s earnings forecast for FY24 and subsequent sell-off following last week’s announcements, Morgan Stanley believes that Hertz’s actions to address these challenges will help mitigate long-term risks for the company. While some risks still remain, the investment firm suggests that the forward estimates for Hertz have declined enough below projections for normalized earnings, warranting the upgrade for this strategically significant rental car giant.
This upgrade from Morgan Stanley is seen as a validation of Hertz’s efforts to overcome the hurdles of its EV strategy. By adding 20,000 Tesla units to its global EV fleet, Hertz is making a strong statement about its commitment to electrification. The rental company is taking proactive steps to adapt to the evolving automotive landscape and position itself as a leader in the transition to electric transportation.
As a result of the upgrade from Morgan Stanley, Hertz’s shares have seen a 7.62% increase in pre-market trading on Thursday morning. This positive response from investors indicates that they are optimistic about Hertz’s ability to navigate the challenges of its EV strategy and capitalize on the opportunities presented by the growing demand for electric vehicles.
In conclusion, Morgan Stanley’s upgrade of Hertz is a recognition of the rental company’s efforts to address the challenges associated with its EV fleet. Despite the initial difficulties and lowered earnings expectations, Hertz’s actions in mitigating long-term risks have gained the confidence of Morgan Stanley. This upgrade bodes well for Hertz’s future prospects and highlights the company’s commitment to embracing the transition to electric vehicles.
Analyst comment
Positive news. Hertz Global received an upgrade from Morgan Stanley to Outperform as it addresses challenges with its EV fleet. Despite a lowered price target, the upgrade indicates confidence in Hertz’s actions to mitigate risks. Hertz’s commitment to electrification and 7.62% increase in pre-market trading show potential for success in the growing EV market.
