United Rentals (URI) Stock Forecast & Price Target

United Rentals, as the largest equipment rental company with a 16% market share in a fragmented industry, is well-positioned to capitalize on the growing preference for rental over ownership, evidenced by an increase in rental penetration in North America from approximately 40% in 2003 to an estimated 55-60% in 2022. The company's strategic acquisitions, notably of GFN and Yak, are exceeding five-year growth targets, enhancing its capability as a comprehensive solutions provider and supporting revenue growth through strong underlying demand reflected in a $300 million capex increase for rental equipment in 2025. Management's emphasis on the growth of nonresidential demand and specialty businesses, particularly in Power/HVAC, indicates a robust outlook for future performance as these segments continue to take market share.

United Rentals reported Q3 revenue of $4,229 million, exceeding forecasts, but faced margin pressures with Adjusted EBITDA of $1,946 million reflecting lower-than-expected gross margins, particularly in equipment rentals. The company's Adjusted EPS of $11.70 fell short of consensus estimates, contributing to a negative outlook due to concerns over potential revenue growth declines amidst a macroeconomic slowdown and softening demand in nonresidential construction. Furthermore, risks are heightened by the potential for deteriorating industrial activity and challenges integrating acquisitions, which may impede the company's ability to achieve favorable margins and overall financial performance.