Herc Hlds (HRI) Stock Forecast & Price Target

Herc Holdings reported a rental revenue of $765 million, reflecting an approximately 8% year-over-year increase, with a notable 26% rise in EBITDA to $419 million when excluding the impact of the entertainment sector. The company's strategic emphasis on long-term rentals and a broadening catalog of specialty items positions it to capitalize on ongoing demand and infrastructure opportunities, especially with federal spending on megaprojects anticipated to rise. Furthermore, the healthy REBITDA margins of 49.3% and 51%, along with robust demand across diverse end markets, indicate a resilient and expanding operational framework that supports a positive financial outlook for Herc Holdings.

Herc Holdings is facing a challenging outlook as it has issued initial 2024 guidance indicating a slow start to its updated three-year plan, with anticipated equipment rental revenue growth only in the range of 7-10% and a significant reduction in net rental capital expenditures, which are projected to be approximately 40% lower year-over-year. The company operates in a contracting environment, as evidenced by the Architecture Billings Index (ABI) being in negative territory for five consecutive months, suggesting ongoing softness in business conditions, particularly in industrial spending. Furthermore, the persistent challenges in the Studio Entertainment segment, compounded by an ongoing actors' strike, have adversely affected EBITDA margins and overall revenue, culminating in a lowered total revenue guidance for 2024.