Hertz Global Holdings Inc. slid the most in more than a year after Morgan Stanley downgraded the stock, saying the rental-car company will have a hard time raising prices and faces a competitive threat from ride-sharing services.
Hertz tumbled 8.6 percent to $16.45 at the close in New York for the biggest one-day decline since June 2014. The Naples, Florida-based company’s shares have fallen 34 percent this year.
“We do not believe meaningful price increases will materialize in this industry” because the largest company, closely held Enterprise Holdings Inc., won’t go along, Morgan Stanley analyst Adam Jonas said in a note Thursday. Ride-sharing services such as Uber Technologies Inc. also restrict pricing and are disrupting the car-rental business, he said.
Jonas cut Hertz to underweight, the equivalent of sell, from equal weight, and trimmed his price target to $15 from $16.
He also said Hertz’s $1 billion share-repurchase plan is “premature.” The company said on July 16 that it had finished restating more than two years of financial results, increased its annualized cost-cut target to $300 million and expects to complete a separation of its equipment-leasing unit in next year’s second quarter.