Avis profit surprise buoys stock in face of proxy battle

Avis Budget Group Inc. gained some breathing room in the looming proxy fight with its top shareholder by reporting profit that trounced analysts’ estimates, spurring the biggest stock jump in almost eight months.

Adjusted earnings of 45 cents a share more than doubled the 21 cents analysts had been expecting as better rental rates boosted revenue. A net benefit of $213 million in the final three months of last year from the Trump Administration’s tax bill also lifted profit.

Avis’ earnings and strategy are being closely watched after top shareholder SRS Investment Management launched a proxy fight to add more of its hand-picked directors to the company’s board. The hedge fund has criticized Avis for failing to meet financial targets and inadequately preparing the company for the transformation of the auto industry.

Avis and rival Hertz Global Holdings are being pressured by the rise of the ride-hailing model championed by Uber Technologies and Lyft. Automakers including General Motors also are experimenting with car-sharing programs that compete with Avis’ Zipcar. These services are becoming legitimate alternatives for the business travelers and tourists that are rental companies’ core customers, putting pressure on traditional models.

“Looking forward, I believe we have substantial opportunities to leverage technology to both improve our customers’ experience and drive efficiencies throughout our organization, and will continue to position ourselves to benefit from the evolving mobility landscape,” Chief Executive Officer Larry De Shon said in a statement.

Avis surged as much 16 percent, the biggest intraday increase since June 26. The shares climbed 13 percent to $44.02 as of 10:41 a.m. in New York.

SRS nominated three new directors last week and said Chairman Ronald Nelson, a former Avis chief executive officer, should be replaced. The New York-based fund owns almost 15 percent of Avis’ shares.