Hertz Could Sell Inventory to CarMax, AutoNation, Jefferies Says

Hertz Global Holdings Inc. could flip its roughly 150,000-car inventory as it looks to stay afloat after filing for bankruptcy last month, according to analysts at Jefferies.

Channel checks suggest used-car firms like CarMax Inc. and AutoNation Inc. could be among those eyeing Hertz in bankruptcy amid a rise in demand for used cars, analysts led by Hamzah Mazari and Bret Jordan wrote in a note to clients. The move could help ease some pressure for Hertz, as a sale of its used-car fleet would shore up some cash concerns and could fetch about $3 billion, the analysts said.

Shares of Hertz, which have drawn particular interest from small-time investors, rallied as much as 32% on the speculation Wednesday. The bankrupt car renter’s stock surged roughly tenfold to top $5.50 a piece earlier this month, before sliding back toward record lows.

Hertz Could Sell Inventory to CarMax, AutoNation, Jefferies Says

Another less probable option for the company would be to see if car dealerships see value in Hertz’s more than 10,000 global branch locations, according to Jefferies. The picking off of storefronts and lots could boost the footprints for CarMax and AutoNation, which have hundreds of locations in the U.S.

The longer it takes for Hertz to re-emerge from bankruptcy with a cleaner structure, the more opportunity there is for rivals to snag additional market share, the analysts said. With bankruptcies typically lasting between six months and two years, Jefferies expects Hertz’s path forward to be toward the longer end of that range.

Hertz shares have cratered more than 90% from a February peak even with the recent attention from retail investors. The Estero, Florida-based company canceled an effort to raise cash by selling shares last week after U.S. regulators questioned its unusual attempt to pay off creditors.

©2020 Bloomberg L.P.

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