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Jefferies says it’s “all revved up” on car rental company Hertz . The firm initiated coverage on Hertz with a buy rating and a $24 price target, implying shares jumping 30% from Monday’s close. “Our buy rating contemplates our view that pricing and margins can run structurally higher vs pre-COVID levels driven by a dysfunctional oligopoly turned functional, HTZ’s more [return on assets-focused] mindset, and continued supply constraints,” analyst Stephanie Moore wrote in a Wednesday note. Moore added that she sees a “structurally improved margin profile” which could further benefit from cost-cutting and revenue programs, in addition to an increasing mix of its higher-margin TNC business — which refers to its partnership with transportation network company Uber to rent Tesla vehicles. “With this business, HTZ now operates the largest EV fleet in the world. We see structural benefits from a maintenance and pricing perspective related to [a] higher mix of EVs,” Moore said. “We think part of the rationale behind HTZ’s EV and rideshare partnerships is due to the potential of autonomous vehicle fleets in the future and rental car players’ expertise in managing a very large fleet and the critical role they could serve in the autonomous vehicle ecosystem. In this blue sky scenario, we see the potential for another $1bn+ in EBITDA opportunity at 20-30+% margins,” the analyst added. Hertz shares were up 1.4% Wednesday before the bell. The stock has rallied almost 20% in 2023. —CNBC’s Michael Bloom contributed to this report.
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