Nov. 20 (Bloomberg) -- Zipcar Inc., the company that rents cars by the hour or day, climbed to a six-week high after Goldman Sachs Group Inc. raised its rating on the stock to buy.
The shares gained 7.1 percent to $7.53 in New York for their highest close since Oct. 8. Zipcar, based in Cambridge, Massachusetts, has declined 44 percent this year.
The rating change from neutral is “a high-risk, high-reward contrarian call,” Goldman said in a Nov. 19 report. Zipcar’s profit may rise more than investors expect because of “potentially higher operating margins in new and established markets” such as Boston, New York, San Francisco and Washington, according to the report.
Zipcar, which created the business of hourly car rental in Cambridge in 2000, has suffered as competition increased. Enterprise Holdings Inc. and Hertz Global Holdings Inc., the two largest companies in the U.S. industry, have expanded hourly rentals this year.
Goldman raised its 12-month price target on Zipcar’s shares to $8.75 from $8. The stock reached a closing peak of $29.27 on April 19, 2011, six days after Zipcar’s initial public offering.
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