Shares of struggling car rental companies rallied Friday, after J.P. Morgan initiated coverage of the industry, saying some of the headwinds have been "over-appreciated" by investors. Analyst Samik Chatterjee started coverage of Avis Budget Group Inc. with an overweight rating and stock price target of $39, which is 21% above current levels. "Margin progression and strong free cash flow delivered by Avis historically, while contending with industry headwinds, speak to solid execution by an experienced management team, in our view," Chatterjee wrote in a note to clients. Hertz Global Holdings Inc. was started at neutral with a $15 stock price target, which was 4.8% above current levels. Chatterjee said Hertz should benefit from "improving execution and correction of recent missteps," but sees revenue growth lagging that of rival Avis. Hertz's stock surged 10.3% in afternoon trade and Avis shares rose 4.0%. Year to date, shares of Hertz have tumbled 33.4% and Avis have dropped 12.4%, while the S&P 500 has climbed 10.5%.
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