NEW YORK (TheStreet) -- Shares of United Rentals (URI) were sinking, lower by 5.49% to $89.74 on heavy volume in mid-morning trading Friday, after analysts at Bank of America/Merrill Lynch downgraded the equipment rental company to "underperform" from "neutral" earlier today.
The firm also lowered its price target to $80 from $108.
Analysts believe pricing power continues to be pressured by the collapse in crude oil prices, as well as the slowdown in the U.S. economy.
As of 10:31 a.m. ET today, about 2.65 million shares have exchanged hands compared to its average daily volume of about 2.17 million shares.
Stamford, Conn.-based United Rentals is an equipment rental company with 832 rental locations, offering approximately 3,100 classes of equipment for rent to construction and industrial companies, manufacturers, utilities, municipalities, homeowners, government entities and other customers.
Separately, TheStreet Ratings team rates UNITED RENTALS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED RENTALS INC (URI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- URI's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 11.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- UNITED RENTALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITED RENTALS INC increased its bottom line by earning $5.18 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($8.35 versus $5.18).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 91.7% when compared to the same quarter one year prior, rising from $60.00 million to $115.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Trading Companies & Distributors industry and the overall market, UNITED RENTALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 58.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.74% is above that of the industry average.
- You can view the full analysis from the report here: URI Ratings Report