10:37 AM EDT, 08/20/2025 (MT Newswires) -- Avis Budget Group's ( CAR ) fundamentals and a soft rental demand environment do not support its current valuation, BofA Securities said in a Wednesday research report.

The pricing and demand pressures in the US rental industry negatively impact the company's earnings power in H2 and 2026, analysts wrote.

The brokerage said its survey signaled that fewer consumers expect to spend more on travel in the coming three months than in 2024, which is expected to result in a soft pricing environment. BofA is concerned about a further slump in demand with tariffs being passed on to consumers in H2.

While the company's growth initiatives position its offerings towards the premium segment and diversify the business into fleet management, these developments are not likely to have a major effect on earnings in the near term. "We see minimal positive catalysts for pricing to surprise to the upside," according to the report.

The brokerage lowered its earnings before interest, taxes, depreciation, and amortization estimate for 2025 and 2026 to $0.9 billion and $1.03 billion, respectively, from $0.95 billion and $1.2 billion earlier.

The brokerage said it downgraded the stock to underperform from buy and cut its price target to $113 per share from $120.

Price: 148.30, Change: -8.32, Percent Change: -5.31