Price Target for This Holding Gets a Lift After Earnings Report
Lifted guidance and prospects for higher margins ahead keep us bullish for this Pro Portfolio name.
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We are lifting our price target for United Rentals URI shares to $950 from $800, opting to look past the extremely modest June-ending quarter earnings per share miss, focusing instead on the quarterly revenue beat and raised 2025 top-line and earnings before interest, taxes, depreciation, and amortization guidance. While some may be surprised by the size of our price target increase, keep in mind we’ve openly communicated the need to raise it as the shares moved past it earlier this month. The catalyst we’ve been waiting for was the quarterly earnings report and the picture it painted about the second half of 2025.
Revenue for this year is now forecast to be $15.8 billion to $16.1 billion, up from the prior $15.6 billion to $16.1 billion and the $15.87 billion market consensus. The updated outlook for adjusted EBITDA was also raised to $7.2 billion-$7.45 billion, compared to the guidance of $7.2 billion-$7.45 billion issued at the end of the March-ending quarter. Parsing those figures, the math points to a quick pace of adjusted EBITDA growth between 10%-14% in the second half of 2025 compared to the first half of 2025, rather than the expected top-line growth of 6%-10%. In terms of United’s revised adjusted EBITDA outlook, it points to a combination of incremental margin expansion and a modest impact of the H&E acquisition termination benefit.
During the June quarter, United’s construction end markets saw impressive growth across both infrastructure and nonresidential construction, while its industrial end markets saw particular strength within power, metals and minerals, and chemical processes. No surprise, given the data points we see behind our positions in Nvidia NVDA, Marvell MRVL, and Eaton ETN. We see that multi-year strength continuing as does United, which called out particular strength in data centers, hospitals, and airports. While no specific comments were made about 2026, management conceded it expects current tailwinds, including mega projects for power, infrastructure, and data center, to continue into 2026. That keeps us bullish on URI shares.
Much like Waste Management WM and Labcorp LH, there is an element of industry consolidation with United Rentals URI. Management estimates its market share around 15%, which suggests there is room for further nip and tuck acquisitions and potentially one or two larger ones. We appreciate United's disciplined approach, and with that in mind, management shared it continues to work its acquisition pipeline and find opportunities for the $2.4 billion-$2.6 billion in free cash flow it targets for this year.
Through the first half of 2025, United bought back $667 million in stock, and alongside its June quarter results, United announced the expansion of its share repurchase program by $400 million. That pegs it around $1.9 billion entering the second half of 2025. Another free cash flow item is the company’s next quarterly dividend payment of $1.79 per share on Aug. 27 to shareholders of record on Aug. 13.
Reiterating our 'Two' rating
As we lift our URI price target, given the upside from the current share price as well as the current relative strength index level north of 74 (overbought), we are reiterating our "Two" rating. We would be open to revisiting that rating should either URI shares drift lower toward $800 or if upcoming nonresidential construction spending data accelerates considerably compared to the first five months of 2025. The June construction spending report is set to be published on Friday, Aug. 1.
The Pro Portfolio is long URI, NVDA, MRVL, ETN, WM, LH.
