Element Fleet Management: Buy, Sell or Hold?

TD Cowen analyst Graham Ryding lowered his target on Element Fleet Management (Element Fleet Management Stock Quote, Chart, News, Analysts, Financials TSX:EFN) to $31.00 from $38.00, citing near-term economic headwinds that are delaying fleet renewals and slowing growth.

As reported by the Globe abd Mail, in his Oct. 19 report, Ryding maintained his “Buy” rating on Element. The average target is $36.78.

Ryding said management has flagged higher interest rates, fuel costs and vehicle inflation as factors causing customers to delay, rather than cancel, fleet renewals.

“During recent conferences management flagged that macro headwinds (higher rates, fuel, and vehicle inflation) were delaying (not cancelling) client demand for renewals,” he said.

Ryding still believes Element can meet its 2026 guidance, though his estimates are now near the lower end of management’s ranges.

The analyst lowered his 2026 fleet origination forecast to $6.3-billion from $6.4-billion, below the company’s guidance of $6.5-billion to $6.7-billion.

His revised $31.00 target reflects a forward price-to-earnings multiple of 13.2 times, down from 16.2 times, to account for the weaker near-term outlook.

Ryding said recent commercial leadership changes suggest management is prioritizing growth in vehicles under management, fleet originations and services penetration.

However, he does not expect improved execution to become visible until 2027.

He now forecasts 2027 revenue growth of 6%, down from 7% previously, placing his estimate at the lower end of Element’s medium-term target. He also expects fleet originations to grow 4%.

Element appointed Manuel Tamayo as chief commercial officer effective Sept. 1, bringing its global commercial operations under one leader.

The company also named Oliver Hahn to lead Element Mobility and expanded chief information officer Adam Simkin’s responsibilities to include Autofleet, both effective Oct. 1.

Separately, Element withdrew from the competitive sale process for FleetPartners Group in September, saying the potential acquisition no longer offered a compelling risk-adjusted return.

The company said it would continue investing in organic growth, evaluating acquisitions and returning capital to shareholders.

More recently, Element announced an expansion of its partnership with Waymo to support the planned launch of autonomous ride-hailing services in Toronto in 2028.

Element will manage on-site fleet operations, including vehicle maintenance, charging infrastructure and fleet readiness, building on its existing partnership with Waymo in San Diego.

Ryding said the near-term outlook remains cautious, but his revised valuation reflects expectations for slower growth rather than a fundamental deterioration in demand.

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