J.P.. Morgan Avis Budget Group, Inc. 1Q14 Takeaways; YE14 PT $59; Leisure & Commercial Pricing Is Encouraging This note serves as a follow up to ow first look at CAR's IQ EPS of $0.16 beating our estimate of $0.06 and the Street's $0.08 (with a range of $0.06 to $0.09). We were surprised to see CAR's -4.1% move today (versus the SPX -0.1%) on what we'd characterize as a very solid print that was driven by solid rental demand and positive pricing (both including and excluding its Payless brand). Additionally, we found management's commentary on the fonvard pricing environment to be compelling, with North American RPD up "at least- +1% (including a Payless brand overhang of 50bps) and commercial pricing expected to grow 1% as well. The commercial pricing inflection point came as a pleasant surprise to us, and likely not factored into investor models as well. We reiterate our OW rating and are taking our YE14 price-target to $59. While CAR has been a strong performer year-to-date, we continue to see upside in the name on what we think will be a story driven by better pricing, and sustained free cash flow generation which will allow CAR to consistently invest in its business and return cash to shareholders. We acknowledge the rental car business is a volatile model, with many moving pieces, but we believe that two substantial contributors to pm-tax income—RPD and Volumes—are on the upswing, and we are not overly concerned about the used car market and residual values. Why is CAR's pricing up only +1% in FY14? Management addressed this on the call, and the answer is threefold, I) the tough winter created incremental insurance replacement demand, which tightened industry fleets more than previously expected in IQ, and this dynamic is unexpected to unwind through the remainder of the year. 2) Given CAR's shorter booking window it only has a - tiny- portion of its summer reservations booked at this point (during the Q that generates -65% of FY EPS