Upgrade Puts Wings On Avis Wheels

Investors sped toward Avis Budget Group on Thursday after rock climbing let direct and higher used car resale values led Barclays researcher Brian Johnson to ascent the stock.Johnson recommends shopping the stock, raising his rating on Avis Budget to overweight, up from next to weight, and carried his cost aim to $15 from $12. According to the analyst, "Avis Budget is nearby an rhythm point on the direct side, with let day comps approaching to spin certain this year, formed on the new uptick in enplanements and road house bedrooms sold."emailprintreprintnewslettercommentssharedel.icio.usDigg It!yahooFacebookTwitterRedditrssforbes:http://www.forbes.com/2010/03/18/avis-budget-group-markets-equities-car-rental-upgrade-closer.html?partner=yahoobuzzMKM Partners researcher Christopher Agnew agrees that direct is rising for travel-related services similar to car rentals. The researcher tells Forbes that Avis Budget took a little cost slicing initiatives in late 2009 that have helped the association quip after it took a strike in the heart of the retrogression last year. "Hotel and airline interpretation shows that corporate transport is starting to increase, that represents 50% of Avis Budgets business," says Agnew.While he lifted his cost target, Johnson marked down his gain superintendence to 62 cents per share in 2010 and $1.00 in 2011, down from his formerly estimated 80 cents per share in 2010 and $1.20 in 2011. He says that the new foresee is formed on a 40% taxation rate going forward, contra the prior 34% rate.In annoy of the drop in his gain prediction, Johnson says the batch has room to grow. Since the fourth entertain gain report, shares have declined some-more than 15% and underperformed the S&P 500 by 21%. "While the muted fourth-quarter gain crop up to have dampened the clever expansion movement the batch experienced via 2009, we perspective Avis Budget as a low worth opportunity, formed on the plain gain arena we design by 2011," he says.Another tailwind for Avis is the rising worth of used cars. The researcher says that the Manheim Used Vehicle Value Index (based on used car auction data) finished Feb 2010 at 118.1, and is right away up by 11.9% year-over-year, demonstrating an "impressive direction annulment contra the year-over-year decreases noticed in between Oct 2007 and Apr 2009." According to Johnson, "Used car prices benefited in 2009 from marked down supply of used vehicles in light of car let companies progressing comparison fleets and diseased new vehicles sales, and this has pushed the worth index to a turn nearby all-time high.",,2010/03/18/avis-budget-group-markets-equities-car-rental-upgrade-closer.htmlOn headlines of Johnsons upgrade, shares of the Parsippany, N.J.-based association gained 8.6%, or 91 cents, to $11.49 on Thursday.Other car let firms were churned in Thursday trading.Dollar Thrifty Automotive Group ( DTG - news - people ) gained twenty-six cents, or 0.8%, to $32.75 and Hertz Global Holdings ( HTZ - news - people ) dipped twenty-four cents, or 2.4%, to $9.70.
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