Zacks Investment Research downgraded shares of Avis Budget Group Inc. (CAR) from OUTPERFORM to NEUTRAL on September 27, 2012, with a target price of $16.00.
We downgraded our recommendation on Avis Budget to Neutral as the company trimmed its revenue outlook for fiscal 2012 following below-than-expected net sales results for the second quarter. The company posted net sales of $1,866 million that fell short of the Zacks Estimate of $1,898 million. Consequently, management now expects fiscal 2012 revenue between $7.2 million and $7.5 billion down from $7.3 million to $7.6 billion forecasted earlier. However, sustained focus on productivity and cost containment initiatives along with lower fleet costs drove Avis Budget to post better-than-expected bottom-line performance. The company's adjusted earnings of $0.94 per share surged over 49% from year-ago quarter and beat the Zacks Consensus Estimate of $0.70. We believe Avis Budget's strong focus on cost reductions will help the company achieve its goal of higher operating margins. Further, Avis Budget's continuous efforts of introducing new ideas and investments in technology upgradation will likely to neutralize the negative factors.
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