- Credit Suisse (SIX:CSGN) takes a deep dive into the implications of the Avis Budget Group (CAR -7.2%) service agreement with Waymo.
- "This announcement matches our thesis that the rental car companies can exist as a going concern, because of their fleet acquisition/management/maintenance/disposition capabilities," writes analyt Anjaneya Singh.
- "We believe that in a driverless future, there is definitely a possibility that the rental car companies become fleet owners and operators – a business model that would not be too different from their core competency today," he goes on.
- "In the meantime, we do not see much materiality in terms of revenue/EBITDA from this agreement... That having been said, this agreement may stir up interest from longer-term investors that have largely shunned rental car stocks (for many reasons, including) because of the belief that these businesses will not survive the disruption that may be coming to the autos ecosystem."
- "We note that CAR's ownership of Zipcar was cited as part of the appeal (vs. other rental car operators), and that HTZ exited its US ridesharing business ~2 years ago."
- CS has a Neutral rating and $27 price target on Avis.
- Now read: Hit The Gas Or Pump The Brakes With These Car Stocks
Original article