Avis, Hertz Rise as Rental Price Recovery Seen Amid Fleet Cutsby
‘Pricing in the Americas has rebounded,’ Avis CFO says
Rental-car rivals have tumbled this year amid oversupply
Avis Budget Group Inc. climbed to the highest in almost five months after Chief Financial Officer David Wyshner said pricing pressure that curbed the rental-car company’s earnings is showing signs of easing.
The shares rose 5.1 percent to $31.94 at 11:23 a.m. New York time after reaching $32.02, the highest intraday price since Jan. 8. Wyshner’s comments, made during a presentation Monday at a Goldman Sachs conference, also buoyed competitor Hertz Global Holdings Inc., which rose as much as 6 percent to $10.65, its highest since March 30.
“As we look at the dynamics that have developed here in the second quarter, we see fleets getting better aligned with demand and I think it’s created a pretty healthy, even robust, pricing environment,” Wyshner told analysts and investors. “It’s been a bit of a challenge in our industry over the last year and a half, and we feel good about the recent dynamic in that regard. We tightened our fleet up and we’re running relatively tight.”
The shares of Avis and Hertz have tumbled this year as an oversupply of vehicles has been squeezing prices and eroding earnings. In February, Avis sank after forecasting 2016 earnings that that trailed analyst estimates, and the stock fell again on May 3, when the company reported a wider-than-expected loss for the first quarter. Hertz trimmed its revenue outlook in April, citing pricing pressure that intensified in the first quarter.
Wyshner on Monday didn’t revise Avis’s 2016 outlook, saying “it’s still too early for us to refine our view on the summer.”
Hertz said Monday that the company’s board formally approved the split of its car-rental and equipment-rental businesses. Originally announced in March 2014, the spinoff is set to be complete after the close on June 30.