United Rentals is Friday's IBD Stock Of The Day, as the heavy machinery rental stock is setting up for an early entry after beating second-quarter earnings estimates in a late Wednesday report. URI shares advanced Friday.
The Connecticut-based outfit reported Q2 profits growing 26% to $9.88 per share while revenue increased 28% to $3.55 billion. URI's rental revenue increased 21%, reflecting "broad-based strength of demand."
Meanwhile, used equipment sales in the quarter skyrocketed 133%. United Rentals reported this was primarily due to normalizing inventory volumes. URI added that its used equipment sales were also buoyed by the acquisition of Ahern Rentals, the eighth largest equipment rental company in North America. That merger was finalized at the end of 2022.
The company also raised its full-year sales outlook. URI now predicts 2023 revenue between $14.0 billion-$14.3 billion. Its previous guidance was $13.7 billion-$14.2 billion. Analysts polled by FactSet forecast $14.18 billion in sales for the year.
Chief Executive Matthew Flannery said in the earnings release there was "strong customer activity across our business."
"We remain encouraged by the momentum we are carrying into the busiest part of our season as well as our customers' continued optimism," Flannery said.
Flannery added he feels URI will catch "multiyear tailwinds" from infrastructure, manufacturing and energy investments in the U.S. URI also sits on the IBD 50 stock list.
United Rentals Stock
URI edged up 1.3% to 446.86 Friday during market trade. On Thursday, United Rentals stock tumbled to its 10-week line following its Q2 earnings. URI ended Thursday down around 0.9% to 441.12.
However, United Rentals stock rallied early Friday, clawing back Thursday's losses, before retreating. Following earnings, analysts handed URI a slew of stock price target increases.
On Friday, Wells Fargo analyst Seth Weber raised his United Rentals price target to 495, up from 490, while maintaining an overweight rating on the shares. Credit Suisse hoisted its target on URI to 521 from 482.
KeyBanc analyst Ken Newman joined in Friday with a price hike to 525, from 520, on URI. That target is almost 19% above where shares traded on Friday.
On Thursday, Baird analyst Mircea Dobre lifted United Rentals' price target to 320, up from 300. That's well below where URI is currently trading. Dobre kept an underperform rating on the shares amid long-term growth concerns.
The stock has formed a cup-with-handle base and appears to be attempting to break a downtrend in the handle.
URI has an official 471.82 buy point, according to MarketSmith. But investors could use a move above Friday's high of 459.30 as an early entry point. Meanwhile, the 18 stocks in the IBD Commercial Services-Leasing industry group are collectively up more than 12% in 2023.
United Rentals stock has a Composite Rating of 93 out of 99 with a 90 Relative Strength Rating. URI also has an EPS Rating of 97 out of 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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