Hertz covenant amendment negative for shares, says Goldman Sachs

Goldman Sachs analyst Lizzie Dove keeps a Sell rating on Hertz after the company filed an amendment to increase its first lien covenants through Q1 of 2025, with additional limitations on restricted payments and permitted investments. Were HTZ to fall short of its minimum liquidity covenant requirement, the company would have five business days to fund the delta via equity to be compliant, the analyst tells investors in a research note. Though the amendment removes the first lien uncertainty overhang in the short term, it is a negative for the stock, says Goldman. The need for the higher covenant trigger implies downside to Street numbers, the terms now include restrictions on operations and there is now a potential for Hertz to fund any delta with equity in a downside scenario, contends the analyst.