Zipcar (ZIP) Has More Zip in It - Analyst
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Price: $2.70 +8.00%
Rating Summary:
2 Buy, 7 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
Rating Summary:
2 Buy, 7 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Recent hot IPO Zipcar (NYSE: ZIP) picked up its first analyst recommendation Friday following a 55 percent surge Thursday, the stock's first day of trading.
Avondale Parner's Senior Research Analyst Fred Lowrance initiated coverage on Zipcar with a Market Outperform rating and $34 price target, suggesting there may be more upside despite the strong run-up on its debut.
The new coverage is notable since Avondale Partners is an independent research firm not involved in the Zipcar IPO. Firm's involved with the underwriting of the Zipcar IPO will have to wait until the quiet period expires, or 40 days, before recommending the stock.
In his report Lowrance said the stock should benefit near-term from the very high level of interest observed during the pre-IPO roadshow and the subsequent IPO. Longer-term, Zipcar will continue to successfully grow its geographic footprint and membership base "while benefiting from a first mover advantage, positive macro trends and a vocal, satisfied membership base of 'Zipsters'."
Key investment highlights noted by Lowrance included: offering a cheaper alternative to car ownership, benefiting from a first-mover advantage and loyal following and a large addressable market which should support continued rapid growth.
Commenting on Zipcar being a cheaper alternative, he said "ZIP estimates that car sharing saves its members $7,000 per year on average compared to car ownership."
On the rapidly growing addressable market, Lowrance stated: "ZIP estimates that 10 million driving age residents can currently walk to a Zipcar in 10 minutes or less despite its presence in only 14 major markets. ZIP believes that there are 100 major markets and hundreds of colleges that fit its desired profile. Third-party and ZIP estimates put the global car sharing market opportunity at $10 billion in annual revenues within 10 years. ZIP intends to add 2 or 3 markets per year, suggesting that its expansion opportunity is both large and long-term in nature."
Potential threats to Zipcar are larger rental car companies like Hertz (NYSE: HTZ) and Enterprise, but they currently only pose a modest competitive threat, according to Lowrance. The analyst added these companies appetite for expansion in the market needs to be monitored.
Shares of Zipcar are down 2.5 percent to $27.29 Friday.
Avondale Parner's Senior Research Analyst Fred Lowrance initiated coverage on Zipcar with a Market Outperform rating and $34 price target, suggesting there may be more upside despite the strong run-up on its debut.
The new coverage is notable since Avondale Partners is an independent research firm not involved in the Zipcar IPO. Firm's involved with the underwriting of the Zipcar IPO will have to wait until the quiet period expires, or 40 days, before recommending the stock.
In his report Lowrance said the stock should benefit near-term from the very high level of interest observed during the pre-IPO roadshow and the subsequent IPO. Longer-term, Zipcar will continue to successfully grow its geographic footprint and membership base "while benefiting from a first mover advantage, positive macro trends and a vocal, satisfied membership base of 'Zipsters'."
Key investment highlights noted by Lowrance included: offering a cheaper alternative to car ownership, benefiting from a first-mover advantage and loyal following and a large addressable market which should support continued rapid growth.
Commenting on Zipcar being a cheaper alternative, he said "ZIP estimates that car sharing saves its members $7,000 per year on average compared to car ownership."
On the rapidly growing addressable market, Lowrance stated: "ZIP estimates that 10 million driving age residents can currently walk to a Zipcar in 10 minutes or less despite its presence in only 14 major markets. ZIP believes that there are 100 major markets and hundreds of colleges that fit its desired profile. Third-party and ZIP estimates put the global car sharing market opportunity at $10 billion in annual revenues within 10 years. ZIP intends to add 2 or 3 markets per year, suggesting that its expansion opportunity is both large and long-term in nature."
Potential threats to Zipcar are larger rental car companies like Hertz (NYSE: HTZ) and Enterprise, but they currently only pose a modest competitive threat, according to Lowrance. The analyst added these companies appetite for expansion in the market needs to be monitored.
Shares of Zipcar are down 2.5 percent to $27.29 Friday.
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