Hertz Shares Soar After Jefferies Analyst Says This About The Bankrupt Company

Hertz Global Holdings Inc. saw its shares fly higher on Wednesday by about 20% after Wall Street learned that it may not be the end of the days for the company after all.

Jefferies analyst Hamzah Mazari said his checks suggest that CarMax Inc. and AutoNation Inc. could be interested in the bankrupt car rental company.

As traders absorbed his sentiments, the stock became the most actively traded on the NYSE on Wednesday.
Meanwhile, CarMax’s stock gained 0.3% while AutoNation shares fell 2.3%.

According to Mazari, the most obvious way for auto dealers CarMax and AutoNation to “swoop in” would be to bid for 150,000 of Hertz’s used cars, which are likely to be sold to pay off lenders, but also as Hertz looks to reduce its fleet given current demand and need to shore up cash.

The analyst believes a sale of 150,000 used cars could raise $3 billion. Separately, Mazari said he believes the $1 billion in liquidity Hertz had as of March 31 will have dwindled to about $365 million by June 30th. This means the company needs debtor-in-possession financing of at least $900 million.

“We think the longer [Hertz] takes to re-emerge from bankruptcy with a cleaner capital structure, the more opportunity there is for rivals to pick up share,” Mazari wrote.

Disclaimer: We have no position in Hertz Global Holdings Inc. (NYSE: HTZ) and have not been compensated for this article.