On Tuesday, BofA Securities maintained its Underperform rating on Hertz Global (NASDAQ:HTZ) with a steady price target of $3.00. This affirmation comes after a detailed review of the company's financial model following the first quarter of 2024, which included a comprehensive liquidity analysis. The analysis was prompted by growing investor concerns regarding Hertz's financial outlook.
BofA Securities' evaluation indicates that Hertz is likely to face a significant EBITDA loss of approximately $700 million in 2024. Moreover, the firm anticipates that a return to normalized EBITDA levels could be prolonged, potentially spanning several years. This is largely attributed to the expected duration it will take for fleet costs to decrease.
The firm has also adjusted the methodology for incorporating the impact of vehicle acquisitions and divestitures into its model. After a thorough review of other cash flow assumptions, BofA Securities concluded that these revisions lead to a lower EBITDA forecast for 2024. However, the changes have only resulted in minor modifications to the projections for 2025 and 2026.
BofA Securities has reiterated its Underperform rating, signaling continued caution regarding Hertz's stock performance. The price objective of $3 remains anchored to an 8x EV/EBITDA multiple based on the firm's 2025 EBITDA estimates. This decision reflects the firm's latest financial analysis and expectations for Hertz's future earnings before interest, taxes, depreciation, and amortization.
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