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Goldman Sachs analyst Jerry Revich reiterated a Buy rating on the shares of Herc Holdings Inc (NYSE:HRI) with a price forecast of $171.
The Bonita Springs, Florida-based company reported its first-quarter 2025 earnings and reaffirmed the guidance. But Revich said the earnings came in below expectations, primarily due to weaker dollar utilization and tighter margins.
The first-quarter 2025 adjusted EBITDA of $339 million, fell short of the firm's projection of $364 million and the FactSet consensus estimate of $362 million.
Dollar utilization reached 37.6%, coming in below the expected 39.1%. The company did not provide specifics on pricing trends or fleet expansion.
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Despite the shortfall, Herc reiterated its full-year adjusted EBITDA guidance at a midpoint of $1.613 billion. That’s slightly above the consensus figure of $1.61 billion.
Revich anticipates the earnings call will focus on several key areas, including whether capital spending plans will be scaled back, given that dollar utilization came in 150 basis points under projections and was nearly 200 basis points lower than last year.
Clarification on what contributed to the decline in dollar utilization specifically, the balance of pricing, fleet usage, and product mix. While utilization trended upward during the quarter, pricing appeared to soften.
The expected trajectory of both utilization and pricing trends in April. Despite concerns about a potential economic downturn, management reaffirmed its guidance, with Q1 EBITDA accounting for 21% of the full-year forecast, in line with the company's average over the past three years.
The investors will also expect progress updates on the regulatory review process for the H&E acquisition.
Price Action: Herc shares traded lower by 6.32% at $104.45 at last check Tuesday.
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Posted In: HRI
