Barclays has revised its price target for Herc Holdings (HRI, Financial), reducing it from $250 to $160, while maintaining an Overweight rating. This decision comes as the company's first-quarter performance indicators failed to meet market expectations, according to a recent analysis.
The analyst notes that Herc Holdings' optimistic market perspective was not embraced by the broader financial community, primarily due to weaker than expected key metrics in the initial quarter of the year. While the company continues to assert a positive outlook for 2025, the pathway to achieving these targets has been complicated by prevailing macroeconomic conditions.
Despite the challenges, Barclays continues to view the shares favorably, keeping an Overweight rating in place. The firm's guidance remains intact, though it acknowledges that external economic factors are presenting additional hurdles to its growth trajectory.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for Herc Holdings Inc (HRI, Financial) is $187.63 with a high estimate of $272.00 and a low estimate of $100.00. The average target implies an upside of 78.96% from the current price of $104.84. More detailed estimate data can be found on the Herc Holdings Inc (HRI) Forecast page.
Based on the consensus recommendation from 10 brokerage firms, Herc Holdings Inc's (HRI, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Herc Holdings Inc (HRI, Financial) in one year is $178.97, suggesting a upside of 70.71% from the current price of $104.84. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Herc Holdings Inc (HRI) Summary page.
HRI Key Business Developments
Release Date: April 22, 2025
- Equipment Rental Revenue Growth: Approximately 5% increase in the quarter, excluding the Cinelease business.
- Rental Revenue: Increased by 2.8% including Cinelease.
- Adjusted EBITDA: Flat at $339 million.
- Net Income: Adjusted net income was $37 million, excluding $74 million of H&E transaction costs.
- Net Fleet CapEx Plan: Roughly 35% lower year-over-year at the midpoint of guidance.
- Fleet Composition: Total fleet was $6.9 billion as of March 31, 2025, with specialty fleet representing about 24% of the total.
- Free Cash Flow: Generated $49 million in the first quarter.
- Leverage Ratio: Current leverage ratio is 2.5x.
- ROIC: Trailing 12-month ROIC for the core business declined 110 basis points to 9.8%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Herc Holdings Inc (HRI, Financial) reported a 5% growth in equipment rental revenue for the quarter, excluding the Cinelease business.
- The company successfully executed a merger agreement to acquire H&E Equipment Services, expanding its scale and geographic coverage.
- Herc Holdings Inc (HRI) is focusing on increasing specialty fleet CapEx to capture share of wallet opportunities and support mega projects.
- The company maintains a strong commitment to safety, achieving a 96% perfect day rate across its operations.
- Herc Holdings Inc (HRI) has a diversified business model, reducing reliance on a single industry or customer, which enhances resilience to economic cycles.
Negative Points
- The company faced challenges in the local market due to prolonged elevated interest rates, impacting local account growth.
- Unusually cold weather in the southern states led to temporary branch closures, affecting daily and weekly local rentals.
- Herc Holdings Inc (HRI) recorded a net loss in the first quarter due to $74 million of H&E transaction costs.
- The local market slowdown and inefficiencies associated with new acquisitions and greenfields impacted the company's ROIC.
- The company is pausing other M&A initiatives to focus on integrating the H&E acquisition, which may limit growth opportunities in the short term.
