Jefferies analysts started Hertz Global (NASDAQ:HTZ) with a Buy rating and a $24 price target in a note Wednesday.
The analysts told investors that Hertz pricing and margins can run structurally higher vs pre-COVID levels driven by a dysfunctional oligopoly turned functional, HTZ's more ROA mindset, and continued supply constraints.
"We believe Revenue per Day (RPD) will moderate some as the post-COVID supply/demand imbalance improves, but HTZ can sustain pricing in the low $60s, a material step up from the 5-year pre-COVID avg.of $43," the analysts wrote.
"We see a structurally improved margin profile. Our sense is that margins can be sustained in the low-DD to mid-DD%+ range (vs. ~7% avg. pre-COVID) from structurally improved pricing and a more ROA focused mindset."
The analysts also noted the company's partnership with ride-share platform Uber (NYSE:UBER) to rent Teslas, which they believe provides structural benefits from a maintenance and pricing perspective and is margin accretive.
Hertz shares are up more than 1% premarket.