Bofa Securities Analyst touches the brakes on Avis Budget Group, Downgrades Stock – Avis Budget GR (Nasdaq: Car)

Avis Budget Group AUTO Shares are traded lower after Bofa Securities Analyst Federico Merendi The shares of buying to under performed and lowered its price target from $ 120 to $ 113.

Babcock argued the Fundamentals in the industry and the macro background do not justify the June outperformance.

The analyst said that the American rental car is confronted with prices and demand pressure that will weigh on the income of Avis Budget in the second half of 2025 and in 2026.

Car shares slide. See the complete breakdown here.

Read also: Avis Budget Group Stock Skids after the Q2 income Miss

The Bank of America survey data shows that fewer consumers expect to spend more on trips in comparison with last year, pointing to a softer price environment. Although TSA data suggests a slight improvement, he sees few catalysts in the short term and known that rates can further weaken the demand.

Babcock acknowledged Avis Budget’s growth attitations, such as the first program for Premium-oriented Avis and a Fleet Management Partnership with Waymo. He described these as positive long -term movements, but emphasized that it is unlikely that they will stimulate the profit in the short term.

The analyst also marked Vehicle Department (DPU) as an uncertain factor. Although stronger residual values can lower the depreciation costs and help the income, he believes that every benefit will probably be marginal compared to the environment from the COVID era.

Babcock has revised its EBITDA estimates to $ 0.9 billion for 2025 and $ 1.03 billion for 2026, against earlier predictions of $ 0.95 billion and $ 1.2 billion. He reduced his price target from $ 120 to $ 113, with which he appreciated the shares at 7.5 times 2026 EV/EBITDA, and said that the profit environment is sufficiently stabilized to no longer rely on normalized multiples.

The analyst expects 2025 turnover of $ 8.09 billion and a profit per share of $ 9.43.

Auto -price promotion: Avis Budget Group shares fall by 4.83% at $ 149.06 on publication on Wednesday.

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