BofA Securities Issues "Underperform" on Avis Budget as Earnings Falter, Stock Sinks

Avis Budget Group, Inc. (CAR), a global leader in vehicle rental and mobility solutions, has just been handed a decisive downgrade by BofA Securities. The analyst, previously bullish, has shifted their stance from "Buy" to "Underperform" while slashing the price target to $113—a jarring 24% below the current market price of $148.85. For investors, this marks a potential inflection point for a company that has ridden post-pandemic demand but now faces rising skepticism amid weak earnings momentum. Analyst downgrades from major institutions like BofA are market-moving events, often signaling deeper, data-driven concerns that self-directed investors cannot afford to ignore.

Key Takeaways

• Potential Downside: BofA Securities' new $113 target implies a 24% downside risk from current levels.

• Stock Price Action: Shares have fallen 22% since a disappointing Q2 earnings report, reversing a prior 98% YTD rally.

• Recent News Impact: Q2 results showed a 76% drop in EPS and flat revenue, triggering sharp market reactions and analyst concern.

• Technical Weakness: The stock's RSI is deeply oversold (25.8), while 20-day EMA and SMA are both well above current prices, signaling continued downward momentum.

• Analyst Clout: BofA's reputation for rigorous sector analysis and market influence adds gravity to this downgrade—especially given recent financial underperformance.

BofA's Downgrade: A Vote of No Confidence

Analyst Rationale and Firm Authority

Bank of America Securities is among the most influential global investment banks, known for its comprehensive research coverage, sector specialization, and deep institutional reach. Its analysts are watched closely for signals on broad sector shifts and company-specific risks. The decision to move Avis Budget from "Buy" to "Underperform"—bypassing Neutral altogether—underscores a high conviction that the company's fundamental picture has deteriorated meaningfully. BofA's new target of $113, a substantial cut, indicates both earnings and sentiment may remain under pressure for quarters to come. Their sector expertise and global reach make this call especially noteworthy for sophisticated investors seeking to front-run institutional flows.

"Avis Budget's Q2 performance fell materially short of expectations, raising questions about the sustainability of recent gains and the company's ability to manage emerging headwinds in the vehicle rental sector."
– BofA Securities Equity Research (2025-08-20)

Financial Reality Check: Earnings Miss, Margin Erosion

Q2 Results: A Painful Reset

The recent earnings cycle has been harsh for Avis Budget Group (CAR). The company reported a 76% collapse in EPS for Q2, while revenues stagnated. This marks a dramatic reversal from the 98% YTD share price surge witnessed earlier in 2025. According to Zacks Investment Research, the 22% post-earnings price plunge was driven by a broad consensus miss—both on the top and bottom line. The Motley Fool highlights that flat revenues, despite a growing travel sector, reveal deeper issues with cost control and fleet management.

Key Financial Metrics (Q2 2025)

• EPS: Down 76% YoY

• Revenue: Flat year-over-year

• Stock Price: Down 22% since report

Such sharp earnings volatility raises questions about the business model's resilience, especially as competition intensifies from ride-share platforms and capital costs rise.

One-Year Price Action: From Euphoria to Capitulation

Technical and Sentiment Breakdown

• 52-Week Range: $54.03 (Mar 13, 2025) – $212.81 (Jul 29, 2025)

• Current Price: $148.85 (pre-market)

• 20-Day EMA/SMA: Both above current price, indicating downward momentum

• RSI: 25.8 (deeply oversold)

• Volume: Recent trading volumes are low, with a marked decline in daily trades, hinting at waning investor enthusiasm

The stock’s sentiment ratio (up days vs. down days) sits below 0.5, reflecting persistent bearishness. Volatility remains elevated, with daily swings exceeding 5% on average. Notably, the technical setup shows the price has collapsed through its lower Bollinger Band, a sign of extreme selling pressure.

Sector and Business Model: Rental Car Recovery Hits a Wall

Avis Budget Group operates globally, providing vehicle rental, leasing, and mobility solutions to both business and leisure travelers. The company capitalized on post-pandemic travel surges and tight vehicle supply, but these tailwinds have faded. The sector is now grappling with:

• Normalizing Demand: As travel patterns stabilize, pricing power is receding.

• Rising Costs: Fleet acquisition and maintenance are pressured by inflation and higher interest rates.

• Competitive Threats: Entrants from the mobility and ride-share space are eroding market share.

These secular headwinds, combined with execution missteps, have sharpened analyst scrutiny.

Recent News & Expert Opinions: Market Doubts Take Center Stage

News Highlights (Last 30 Days)

• "Avis Budget Stock Declines 22% Since Reporting Q2 Earnings Miss" — Zacks Investment Research

• "Avis (CAR) Q2 EPS Drops 76% Revenue Flat" — The Motley Fool

Industry commentary has been scathing. As one analyst notes:

"Avis’s results are a wake-up call for the sector. The margin contraction and lack of revenue growth suggest fundamental challenges that won’t be easily fixed."
— Jonathan Kelcher, TD Cowen (Q2 Earnings Call Transcript)

Downside Risk: What the New Target Implies

BofA’s $113 price target is 24% below the current market price. For investors, this signals a pronounced downside risk in the near-to-mid term, especially if operational challenges persist or macro conditions worsen. The downgrade, combined with sharply negative technicals and deteriorating sentiment, leaves little room for error.

Table: Valuation & Technical Snapshot

Conclusion: Navigating the Road Ahead

BofA’s downgrade of Avis Budget Group (CAR) to "Underperform" is not a routine rating shift; it is a clear warning that the company faces mounting operational and market headwinds. With a potential 24% downside looming and technicals confirming the bearish case, investors should reassess risk and scrutinize the company’s ability to reverse negative earnings momentum. Analyst downgrades from institutions with BofA’s clout rarely occur in a vacuum—they reflect systemic, data-driven concerns that could presage further weakness.

For more real-time analyst actions, sector insights, and data-driven investment research, visit DeepStreet.io.