Avis Budget Shorts Retreat as Analysts Cut Targets

Short sellers have been pulling back from CAR at a meaningful pace ahead of today's earnings report, with short interest falling 14.5% over the past week to 12.6% of the free float. That remains a high absolute level by any standard, but the direction is notable: bears reduced positions by roughly 750,000 shares in five sessions, a significant reversal after weeks of steady pressure.

The stock has responded in kind, rising 9.5% over the past week to $111.52, a sharp divergence from peers. Direct rival HTZ fell 5.9% over the same period, and the closest correlated names were broadly flat to lower. Borrow conditions tell a similar story: availability is loose at 143%, well above the stock's 52-week trough of 0.07%, suggesting no squeeze mechanics are driving the short covering. Cost to borrow at 0.29% is low, even after a 21% uptick on the week.

The analyst community is heading into the print in a more cautious posture than the share price implies. Barclays' Dan Levy cut his target to $115 from $160 on November 2, the day before results, maintaining an Equal-Weight rating. That follows a similar move by JP Morgan in October, where the Underweight target was trimmed from $145 to $105. Morgan Stanley held its Equal-Weight and trimmed to $95 in September. Goldman Sachs carries a Sell rating. The consensus mean target of $116 sits only modestly above the current price, leaving little implied upside even from a Street that is not uniformly bearish. EV/EBITDA at 35.5x has expanded roughly 0.5 turns over the past 30 days on the back of the recent price move, compressing the value argument that had been one of the few positives in the factor profile.

The stock's earnings history adds context. The three most recent quarterly prints each produced a negative one-day reaction, with moves of -8.6%, -8.6%, and -5.4% respectively. The sole positive print in the visible history was the most recent October event, which saw shares gain 3.1%. The short score of 78 places CAR near the top of the bearish-positioning universe despite the recent short covering, and ORTEX's factor data ranks EPS momentum in the bottom decile over both 30-day and 90-day windows.

The print will therefore test whether a sequential improvement in fleet economics is sufficient to justify a stock that has recovered sharply from its lows, against a backdrop where major analysts cut targets materially in the weeks before results and historical reactions have skewed negative.