Rental car companies Avis Budget Group (CAR) and Hertz Global Holdings (HTZ) could benefit from US auto tariffs that can lead to lower depreciation per unit or DPU, BofA Securities said in a Friday note.
"For the full year 2025, we expect the tariffs could drive used vehicle prices higher, potentially supporting lower DPUs than Hertz and Avis have been guiding for," the investment firm said.
According to BofA Securities, the tariffs could also drive demand and prices for the used vehicle market and boost the companies' vehicle sales this year.
BofA Securities said its Q1 earnings estimates for Avis and Hertz remain "largely unchanged" as its checks indicated solid demand during the quarter, but its 2025 estimates slightly declined as increased economic uncertainty is expected to impact demand and pricing.
The investment firm now estimates Avis' 2025 earnings per share at $7.70, from $9.10 previously, and Hertz at a loss per share of $1.90, from $1.75 previously.
BofA Securities also lowered its price targets for the companies, down to $105 for Avis from $120 and Hertz to $2.70 from $3.30. The firm reiterated its ratings of buy on Avis and underperform on Hertz
Price: 67.56, Change: -3.31, Percent Change: -4.67
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