Hertz Global Holdings (HTZ) late on Friday filed for bankruptcy protection after the car rental firm failed to reach long-term agreements with creditors as it grapples with the financial fallout induced by the coronavirus pandemic.The news sent shares down 36% to $1.82 in extended U.S. trading on Friday. The company, whose largest shareholder is billionaire investor Carl Icahn with an almost 39% stake, said that the lockdown orders tied to the virus pandemic fueled an increase in car rental cancellations and a decline in future bookings.Hertz said it had more than $1 billion in cash on hand to support its ongoing operations. The company may seek additional cash, including through new borrowings, depending upon the length of the COVID-19 induced crisis and its impact on revenue.“The impact of COVID-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings. Hertz took immediate actions to prioritize the health and safety of employees and customers, eliminate all non-essential spending and preserve liquidity,” the company said in a statement. “However, uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales.”Hertz is embarking on the financial reorganization as it sees “a prolonged travel and overall global economic recovery”. During the reorganization process, the company will maintain ordinary operations, continue to pay vendors and suppliers, pay its employees, and continue with its customer loyalty programs.The car rental company said that its principal international operating regions including Europe, Australia and New Zealand are not included in the U.S. Chapter 11 proceedings. In addition, Hertz’s franchised locations, which are not owned by the company, also are not included in the bankruptcy proceedings.Earlier this month, the ailing car rental firm reported disappointing first quarter earning results with Q1 Non-GAAP EPS of -$1.78 missing Street expectations by $0.59. Meanwhile revenue of $1.92B dropped 9% year-over-year and fell short of consensus estimates by $70M.On May 16, Hertz announced that its Executive VP Paul Stone will replace Kathryn Marinello as CEO.Following the announcement, Deutsche Bank’s Chris Woronka wrote: “In his most recent role, Stone's oversight included the company's TNC business, as well as its expanded retail operations (which had been a key driver of significantly reduced fleet costs throughout 2018 and 2019 but quickly became a headwind earlier this year).”“We see both of these units as being key to the company's ability to return to profitability in a more normalized economic environment,” Woronka added.The analyst reiterated his Hold rating on the stock with a $3 price target. TipRanks data shows that three analysts in the past three months, have cut Hertz stock to Sell from Hold, with a further analyst downgrading the stock to Hold. Overall, this gives Hertz a bearish Moderate Sell analyst consensus.With shares trading down 82% on a year-to-date basis, the $6.75 average analyst price target indicates 138% upside potential from the current share price.(See Hertz stock analysis on TipRanks).Related News: Foot Locker Earnings Miss On All Counts; Stock Down 6% In Pre-Market Nvidia Sinks Despite Stellar Earnings; Top Analyst Says Buy On Any Weakness Starbucks Regains Almost Two-Thirds Of U.S. Same-Store Sales As Stores Reopen More recent articles from Smarter Analyst: * GM Delays Some Production Shifts At 3 U.S. Truck Plants – Report * Gilead’s Remdesivir Most ‘Beneficial’ In Covid-19 Patients Who Need Extra Oxygen, Study Shows * KKR Invests $1.5 Billion in Reliance’s Jio Platforms In Biggest Deal In Asia * Tesla Asks China To Build Model 3 Cars With LFP Batteries – Report
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