Avis Budget stock rebounds after analyst says investors can stop selling after recent price drop
Avis Budget Group Inc. shares rallied on Thursday, after Deutsche Bank analyst Chris Woronka said the stock had fallen enough in the past two months to no longer recommend investors to sell. .
The CAR stock of the car rental company,
jumped 4.4% at midday. On Wednesday it had fallen 3.8% to close at the lowest price since November 1, the day before the stock skyrocketed 108.3% to a record close of $ 357.17 during a rally inspired by memes after the third quarter results.
Do not miss: Stocks don’t get more Meme than Avis.
Deutsche Bank’s Woronka upgraded its rating on Avis to keep it, after cutting it to sell after the November 2 close. He kept his target for the stock price at $ 210, which implies an increase of about 3% from current levels.
Woronka said that when he downgraded Avis two months ago, he was constructive about the fundamentals of the rental car industry, but said certain trading dynamics had pushed valuations to new heights. “Unreasonable”.
“However, based on Wednesday’s closing price, we consider the risk / reward ratio to be considerably more balanced than it was on November 2,” Woronka wrote. “In the absence of compelling reasons to lower our target multiple or our estimates, we simply believe that the most appropriate course of action is to change our rating from sell to hold, and we have done so.”
Wednesday’s closing price of $ 194.90 was 45.4% lower than the November 2 close.
Although Avis shares are trading at a higher valuation compared to shares in rival Hertz Global Holdings Inc. HTZ,
Woronka said this reflects more of Hertz’s undervaluation. He reiterated his buy rating on Hertz and his stock price target of $ 34, which involved an increase of about 46%.
Despite the recent pullback, Avis shares have risen a further 162.0% in the past six months, while Hertz stock has soared to 7.4% and the S&P 500 SPX index,