What Happened?
Shares of equipment rental company Herc Holdings (NYSE: HRI) jumped 3.4% in the afternoon session after sentiment in the equipment rental sector improved as a major competitor, United Rentals (URI), received a significant price target increase from JP Morgan. The bank maintained its "Overweight" rating on United Rentals and raised its price target by 15% to $1,150. Such a move for a large player often signals strong confidence in the entire industry, which appeared to lift shares of peers like Herc.
The shares closed the day at $124.54, up 4.6% from previous close.
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What Is The Market Telling Us
Herc’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 4.9% on the news that an analyst downgrade of a key competitor, Ashtead Group (AHT), sent ripples of concern through the equipment rental sector.
RBC Capital Markets lowered its rating on Ashtead to “underperform,” a significant shift from its previous “sector perform” rating. The bank’s analysts flagged several industry-wide problems that spooked investors. They pointed to rising costs and, crucially, overcapacity in the equipment rental market, which has squashed rental rates. The report also noted that auction data showed falling values for key types of equipment. Because these challenges affect the entire industry, the negative outlook for Ashtead dragged down sentiment for Herc as well, as investors worried it faced similar headwinds.
Herc is down 33.1% since the beginning of the year, and at $124.42 per share, it is trading 48% below its 52-week high of $239.28 from November 2024. Investors who bought $1,000 worth of Herc’s shares 5 years ago would now be looking at an investment worth $3,350.
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