Business conditions continued to deteriorate year-over-year in April, according to a report by UBS Investment Research. In its 62nd Rental Equipment Branch Manager Survey, UBS received more than 120 responses. In it, branch managers indicated that year-over-year business conditions deteriorated in April, marking the fifth consecutive survey in which branch managers have noted year-over-year deterioration in business conditions.
Consistent with its recent surveys, rental rates continued to deteriorate on a sequential basis. “We believe this deterioration in rates is consistent with the year-over-year rental rate changes recently reported by H&E (down 1.8 percent), United Rentals (down 0.6 percent) and RSC Holdings (down 0.4 precent) in their respective first quarters,” wrote analyst David Bleustein, managing director and director of U.S. Equities Research for UBS.
Branch managers indicated rental rate strength in small/light equipment, compaction equipment and “other” equipment (including cranes). Conversely, branch managers, in aggregate, noted pricing weakness in earthmoving equipment, aerials, material handling equipment and trench safety equipment.
UBS said it maintains its “Buy” rating and $18 per share price target on H&E Equipment Services; maintains its “Buy” rating and $14 per share price target on RSC Holdings; and maintains its “Buy” rating and $28 per share price target on United Rentals.
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