Rental car shares drop on Avis, Hertz downgrades

Barclays Capital analyst Manav Patnaik said "unprecedented economic pressures" are likely to continue hurting car rental companies for at least the next two quarters. He estimated that the industry could see a recovery in 2010.

"A 'show me' story, with a near term theme of 'survival of the fittest' is likely to cause volatility in the shares," Patnaik said.

Patnaik cut Avis' rating to "Underweight" from "Equal Weight," citing risks to the company's financing. He noted that the company needs to renegotiate its corporate debt covenant restrictions and refinance roughly $2.5 billion in conduit facilities by February.

Avis shares fell 6 cents, or 4.7 percent, to $1.19 in afternoon trading. The stock has traded between $1.04 and $18.06 during the past 52 weeks.

Patnaik lowered Hertz's rating to "Equal Weight" from "Overweight." Hertz shares dropped 56 cents, or 12 percent, to $4.20 in afternoon trading. During the past 52 weeks, the stock has traded between $3.64 and $19.58.

Shares of Dollar Thrifty Automotive Group Inc. lost 6 cents, or 4.9 percent, to $1.17. The stock has traded between 64 cents and $29.16 during the past year.