Morgan Stanley Expects No Change from United Rentals 1Q14 Earnings

In a report published Thursday, Morgan Stanley analyst Nicole DeBlase reiterated an Equal-Weight rating and $99.00 price target on United Rentals (NYSE: URI).

In the report, Morgan Stanley noted, “We are attracted to URI's 50% exposure to the US Non-Residential Construction market, our preferred end market within the Machinery space. However, we believe that as visibility into Non-Resi project activity improves, construction companies will opt to buy more equipment (over renting). As such, we prefer the OEM names, at this stage of the recovery.

"While the recent announcement of a $500m share repurchase indicates a commitment to a more disciplined CapEx strategy, we prefer to stay on the sidelines given the recent sharp upward move in the share price. The recent National Pump acquisition is expected to add 10% to EPS in 2014-15e, and we expect management to continue to expand into the Specialty Rentals market (as per guidance for $1bn sales over time).”

United Rentals closed on Wednesday at $90.98.