United Rentals Inc. rose Monday after an analyst upgraded the shares on the equipment rental company's lower costs, significant free cash flow and stronger balance sheet.
Oppenheimer analyst Scott Schneeberger increased his rating to "Outperform" from "Perform," saying the Greenwich, Conn., company had cut costs and generated robust free cash flow despite "the currently challenging demand environment."
The analyst, who has a $14 price target, said its current price makes it an attractive opportunity for investors.
Shares rose 50 cents, or 5.4 percent, to $9.40 in morning trading.
"We view the current (stock price) level as an opportune entry point for long-term investors to build or add positions, as URI is positioning well to weather a potentially prolonged downturn and emerge strong as conditions improve," Schneeberger said.
He also increased to a loss of 75 cents from a loss of 85 cents his estimate for earnings per share next year, "despite 2010 likely representing URI's trough."
Earlier this month, United Rentals and a subsidiary said they are offering up to $572.5 million in convertible senior unsecured notes, proceeds of which will be used to pay off notes due 2014.
Schneeberger cited the company's reduced debt and extended maturities on remaining debt in his upgrade.