Cloudy Near-Term Outlook at Avis
Zacks senior services industry analyst Steven Ralston, CFA has recently recommended a Hold to the shares of business services provider Avis Budget Group (CAR). Here are some of the reasons why:
'The near-term outlook for the Avis Budget Group is difficult to ascertain. In addition, the truck rental business is experiencing decreased rental days and pricing pressure. For 2007, management plans to expand the company's product portfolio by adding more off-airport rental facilities and providing additional enhanced services.
'However, earnings visibility is limited and historical valuation data is unavailable for Avis Budget Group. The shares have a limited valuation history due to the recent re-structuring of the parent company (Cendant) through spin-offs and asset sales.
'The target of $25.00 is based on a 21 P/E multiple on estimated year-end EPS, which is approximately where a 6% growth company with an average levered balance sheet should be valued. Therefore, the Hold rating is maintained for Avis Budget Group.'
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