Avis Budget Group Inc (CAR)

[JohnCM]

Hertz, Avis stocks plunge after Morgan Stanley warns of significant earnings disruption from the coronavirus

March 5, 2020
By Tomi Kilgore

Shares of car rental companies Hertz Global Holdings Inc. HTZ, +11.13% and Avis Budget Group Inc. CAR, +12.26% suffered double-digit percentage declines, after Morgan Stanley analyst Adam Jonas said he believed investors still underappreciated the risks associated with the coronavirus outbreak.

Hertz's stock tumbled 12.3%, putting them on track for a tenth-straight loss toward the lowest close since July 2017. Avis's stock took a 12.4% dive toward a six-month low, and have plummeted 49.7% since it closed at 4 1/2-year high of $50.34 on Feb. 20. "While the situation remains very fluid, we believe investors should prepare for potentially significant disruption to earnings and free cash flow at [Hertz] and [Avis] related to a sharp slowdown in U.S. domestic and international travel," Jonas wrote in a note to clients. "Following discussions with a number of Morgan Stanley analysts monitoring data across travel/leisure, online travel booking and airlines, it appears there is material risk to our assumptions for transaction days, fleet utilization and, we believe, pricing for the car rental names."

Over the past 12 months, Hertz shares have lost 36.0% and Avis's stock has dropped 28.4%, while the S&P 500 SPX, -0.16% has gained 8.7%.