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Why Shares of Hertz Global Holdings Surged on Friday

By Daniel Miller - Mar 11, 2016 at 2:49PM

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Despite the company's bumpy ride over the last year, Friday's 10% pop brought some short-term relief.


Image source: Hertz Global Holdings' investor day presentation. 

What: Shares of Hertz Global Holdings (HTZG.Q), a car, truck, equipment, and rental and leasing company with operations in North America and Europe, are popping 10% higher today after an analyst reversed its rating by two notches.

So what: Morgan Stanley moved its rating of Hertz from "underweight" to "overweight," but maintained its $13 price target on the stock, which offers a roughly 20% upside from its current price. Part of the reasoning behind the rating change is simply because the stock price has collapsed over the past 12 months, and it appears to be oversold.

Adam Jonas, an analyst at Morgan Stanley, noted that the management's focus on cost reduction and its healthy awareness of how mobile technology and software could transform the car rental business, should prove beneficial over the long term.

HTZ Chart
HTZ data by YCharts.

Now what: Despite today's jump in stock price, headwinds remain. More specifically, it's likely that there will continue to be soft pricing in the U.S. rental car market during the first half of 2016. It'll be important for investors therefore to monitor the company's progress on increasing its customer satisfaction across its major brands, enhance its fleet management efficiency, and cut costs.

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