Why Hertz Shares Are Surging Higher Wednesday

Shares of care rental company Hertz Global Holdings Inc (NYSE: HTZ), which filed for Chapter 11 bankruptcy in late May, were advancing strongly Wednesday.

What Happened: Speculation concerning a sale of Hertz gained ground after Jefferies analyst Hamzah Mazari said in a note that the embattled company could be sought afterby peer Avis Budget Group Inc. (NASDAQ: CAR) or auto retailers such as CarMax, Inc (NYSE: KMX) and AutoNation, Inc. (NYSE: AN).

Why it Matters: CarMax and AutoNation might be interested in the Hertz fleet of 150,000 used cars, with the potential proceeds likely to be used to pay off Hertz debtors, the analyst said.

After Hertz stock plummeted to a low of 40 cents immediately after its bankruptcy filing, it unsuccessfully tried to fundraise by selling shares.

A liquidation could also help the company trim its fleet to align supply with the muted demand outlook in the wake of the COVID-19 pandemic, according to Jefferies.

At last check, Hertz shares were jumping 55.2% to $1.94. while Avis Budget was slipping 9.62% to $22.27. CarMax shares were down 2.85% at $89.60 and AutoNation was down 6.41% at $36.04. 

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