UBS downgraded Verra Mobility (NASDAQ:VRRM) from Buy to Neutral and cut its price target to $4.00 from $23.00 after the termination of the contract with Avis Budget. The stock now trades at $3.85, down 71% over the past week and 82% over six months.
The contract loss is expected to reduce Verra Mobility's 2026 annualized revenue by $135-$145 million and EBITDA by $120-$125 million before cost cuts. This represents roughly 14% of prior 2026 revenue guidance and 30% of EBITDA guidance. The company reported $358 million in EBITDA over the last twelve months with a 57% gross profit margin.
UBS reduced its 2027-2028 EBITDA estimates by 27%-36% due to the Avis contract loss and uncertainty around renewals. Analysts cited potential pricing pressure, offset partly by cost reductions. Verra Mobility's contracts with Hertz and Enterprise are up for renewal in Q2 and Q4 2027, respectively.
Following the news, Verra Mobility revised its 2026 outlook: revenue $985-$995 million, adjusted EBITDA $380-$385 million. Multiple analysts downgraded the stock, including William Blair, Deutsche Bank, and Baird. The company is taking immediate cost-cutting steps.
