Verra Mobility notified investors that Avis Budget Group has ended its longstanding tolling services arrangement. The termination is expected to remove approximately 13% to 14% of Verra’s annual revenue and create notable headwinds for the company’s earnings profile.
Following the announcement, several equity research teams revised their ratings. Robert W. Baird moved Verra to "Neutral" from "Outperform" and reduced its price target from $20 to $8. Baird calculated that the Avis engagement contributed about $132 million in yearly revenue, which it estimated represented roughly 30% of Verra’s commercial-services segment.
Baird projected the Avis loss could lower annualized EBITDA by $120 million to $125 million and shave nearly $0.60 off earnings per share on an annual basis. The brokerage also flagged the potential for heightened investor concern about customer concentration, noting the possibility that other major rental-car clients could consider alternative providers or bring services in-house. Enterprise and Hertz were specifically mentioned as clients whose contracts are thought to come up for renewal in 2027.
JPMorgan Chase issued its own downgrade, cutting the stock to "Underweight" from "Neutral" and trimming its price target to $8 from $17. The bank emphasized customer-concentration risks and growing margin pressure tied both to the Avis termination and to Verra’s New York City contract.
JPMorgan cited Verra’s updated expectation that the Avis contract termination will lower annualized commercial-services revenue by $135 million to $145 million and reduce segment profit by $120 million to $125 million before the company implements any cost-reduction measures.
The bank also pointed to the significance of a small number of large customers. According to JPMorgan, the top three rental-car customers account for more than 35% of Verra’s total revenue and roughly 80% of revenue within the commercial-services segment.
In response to the client loss, Verra trimmed its outlook for fiscal 2026. Revenue guidance was lowered to a range of $985 million to $995 million, down from prior guidance of about $1.02 billion to $1.03 billion. Adjusted EBITDA guidance was cut to $380 million to $385 million from $405 million to $415 million. Adjusted earnings per share guidance was revised downward to $1.19 to $1.25 from $1.32 to $1.38.
Despite the negative developments, analysts from both firms acknowledged that Verra retains strong positions in government traffic-enforcement systems and smart mobility infrastructure. Nevertheless, they warned that uncertainty over client renewals and eroding profitability could weigh on investor sentiment at least through 2027.
Contextual note - The loss of a major commercial client has produced material revisions to near-term financial expectations and has highlighted concentration risk within Verra’s commercial-services business. The company has already reflected the impact in its 2026 guidance cuts.
What management and analysts say - Brokerages quantified the revenue and profit hit, and both Baird and JPMorgan adjusted their outlooks and price targets accordingly. Estimates of the impact on annualized revenue and segment profit are similar across the two firms, with slight differences in their revenue ranges tied to the Avis termination.
Outlook - While government and smart-mobility contracts remain a strength, analysts flagged that questions about customer renewals and margin recovery are likely to persist through at least 2027.