United Rentals Stock Jumps on Bernstein Upgrade to 'Outperform'
Analysts cite an expected rebound in non-residential construction spending as a key catalyst for the equipment rental giant.
Shares of United Rentals (NYSE: URI) climbed nearly 3% in recent trading after a significant ratings upgrade from Bernstein. The firm elevated the equipment rental leader to 'Outperform' from 'Market Perform,' setting a new price target of $1,128, which suggests a potential 20% upside from current levels.
The upgrade is anchored in a bullish forecast for the U.S. construction sector. , which has been a headwind for the industry. The firm anticipates that aligning monetary and fiscal policies will drive a cyclical recovery, with spending projected to rise 4% in 2026 and 6% annually in the following two years.
As the largest equipment rental company in North America, United Rentals is uniquely positioned to capitalize on this trend. The company's organic growth is highly correlated with the non-residential market, and it typically expands at twice the rate of the sector. Bernstein identified several key growth drivers, including massive investments in data centers, manufacturing facilities, the electric grid, and renewable power projects.
Adding to the positive sentiment, , raising its own price target to $1,080 from $1,000. Analysts believe the market has not fully priced in the company's potential for significant margin and return on invested capital (ROIC) improvements through 2028.
Bernstein's report highlighted that United Rentals is becoming a less capital-intensive business, which warrants a higher trading multiple. The firm also pointed to the successful expansion of the company's specialty rental segment, which helps to . With these factors in play, analysts forecast a 12% earnings compound annual growth rate (CAGR) for URI over the next three years, signaling strong prospects for the rental giant.