CAR Should I Buy
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Avis Budget Group Inc (CAR) is not a strong buy for a beginner long-term investor at this time. The company is facing significant financial challenges, including a substantial Q4 loss, declining revenue, and negative sentiment from analysts. While hedge funds are increasing their positions, the technical indicators and options data suggest a bearish sentiment. For a beginner investor with a long-term focus, it is advisable to wait for clearer signs of recovery and stability in the company's financial performance before considering an investment.
The technical indicators for CAR are bearish. The MACD histogram is negative and contracting, RSI is neutral at 37.705, and moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading below key pivot levels, with support at $90.17 and resistance at $105.526. These indicators suggest a downward trend with no immediate signs of reversal.
Hedge funds are increasing their positions, with a 185.60% rise in buying activity over the last quarter. Analysts predict a return to profitability in 2025 with an expected EPS of $9.66.
The company reported a significant Q4 loss of $21.25 per share, a 61.85% YoY drop in net income, and a 1.70% decline in revenue. Management has issued warnings about demand volatility, vehicle recalls, and a $500 million write-down on its EV fleet. Analysts have lowered price targets and ratings, reflecting negative sentiment.
In Q4 2025, Avis Budget Group reported revenue of $2.664 billion, down 1.70% YoY. Net income dropped to -$747 million, a 61.85% decline YoY, and EPS fell to -$21.22. Gross margin improved to 18.62%, up 14.94% YoY, but overall financial performance was weak.
Analysts have a cautious to negative outlook on CAR. Barclays lowered its price target to $95 from $120, maintaining an Equal Weight rating. Goldman Sachs reduced its price target to $85 from $111 with a Sell rating. Morgan Stanley downgraded the stock to Equal Weight from Overweight, citing challenges in the EV market and demand volatility.
