Updated to include additional analyst commentary and earnings estimates.
NEW YORK ( TheStreet) -- After stronger than expected fourth quarter earnings, Hertz (HTZ) may dust off its M&A playbook in 2012 and retry an acquisition of Dollar Thrifty (DTG) to alleviate pricing pressures and wrench out cost savings, according to industry analysts.
Hertz may look at a merger with Dollar Thrifty as a way to stay aggressive in 2012 after its shares rose sharply on Tuesday on stronger than expected earnings and guidance. While analysts point to consolidation as a quick way for the second largest U.S. rental car company to continue to grow its profit margins, a deal still must overcome regulatory hurdles.
|Hertz jumped the most in two months on Feb. 22 fourth quarter earnings|
In October, Hertz pulled a cash and share exchange offer for Dollar Thrifty that valued the industry fourth player at $1.91 billion or $72 a share, on deteriorating market conditions, a negotiating deadlock and regulatory scrutiny. However, the company has kept hope of an eventual deal alive, with its Chief Executive indicating a continued 2012 push."
Analysts polled by Bloomberg give Hertz shares a price target of $20.50, while they value Dollar Thrifty and Avis Budget shares at $79.40 and $20.69, respectively. Those analysts also expect improving revenue and profits across the industry in 2012. Hertz's sales are expected to grow over 7% to $8.9 billion and its profitsare expected to more than double to $546 million. Meanwhile, Dollar Thrifty is expected to grow sales by nearly 4% and Avis Budget is likely to swing to a post-crisis high profit of $215.5 million, according to analyst estimates compiled by Bloomberg.
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