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Herc Holdings is falling after BofA's double downgrade

Published 07/21/2023, 11:54 AM
© Reuters.

Investing.com -- Herc Holdings Inc. (NYSE:HRI) shares were falling after a double downgrade from BofA Securities, which cited the Hollywood writers and actors strike.

Shares were down 5.8% on Friday but are up just over 3% so far this year.

BofA cut its rating on the stock to underperform from buy. It also lowered its price target to $140 from $150 a share, saying the stock is up 40% since June. The stock is trading at around $133 a share.

Herc provides rental equipment, and in the case of the movie industry, it rents equipment to studios to shoot live content. Hollywood only represents about 3% to 5% of the company’s business, but the analysts said they don’t believe the industry’s shut down because of the strike is factored into expectations for the stock.

“Our concern is the Entertainment segment is high margin and fleet is less fungible compared to construction equipment when activity drops, resulting in weaker fleet productivity,” they wrote in a note.

“To be clear, the entertainment impact will be relatively minor, however it muddies a story that has become more about execution,” the note said. “In an earnings season where we expect largely positive results across the space, it stands out as an idiosyncratic headwind.”

 

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