Morgan Stanley upgraded Avis Budget Group (NASDAQ:CAR) to an Equal-weight rating on Friday after having the car rental stock slotted at Underweight.
Analyst Adam Jonas said Avis Budget's (CAR) Q1 results were strong with a positive forward view on travel patterns and fleet discipline presented.
"While we continue to expect earnings to decline (lower RPD, higher fleet cost, higher interest exp) we believe such risks are discounted in the share price," he noted.
After speaking with management, Jonas and team have more confidence in Avis Budget's (CAR) ability to display operating leverage amid an eventual reduction in company top line as other competitors re-fleet. However, the firm is still cautious on downside risk for the stock amid concerns on revenue metrics and fleet costs.
Morgan Stanley assigned a price target of $182 to CAR.
Shares of CAR broke 2.88% higher in premarket action on Friday.