By Dhirendra Tripathi
The brokerage called the stock a buy, citing continued existence of factors that led to the company “over-earning” in 2021 next year as well. The target price is now around 25% more than the stock’s current level.
According to analyst John Murphy, limited incoming vehicle supply and tight average fleet, elevated revenue per day from the ongoing supply-demand imbalance, and moderated per unit fleet cost from elevated used vehicle pricing were all factors contributing to his optimism.
He believes the current stock price doesn’t fully capture the benefits that would arise as a result of the ongoing efforts at the company. This should result in upward revisions to 2022+ estimates that, he said.
Severe shortage of chips that has hampered vehicle output at almost every automaker in the world has forced consumers to turn to second-hand vehicle retailers, cab aggregators and rental car companies for their commute.
Avis’ June-quarter result was the best in its history as revenue more than tripled to $2.4 billion and adjusted earnings more than quadrupled from 2019-level to $624 million.
In the second quarter, the company purchased more than $3 billion of fleet to bring the year-to-date total to more than $6 billion.
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