Following yesterday’s trading, Hertz Global Holdings, Inc. (NYSE:HTZ) announced via a regulatory filing with the SEC that its 2014 results would be “well below” its prior guidance citing failures to meet demand due to the automotive industry’s massive recalls and the cost of its accounting review.

Hertz

Hertz: Downgrades from The Street

While investors immediately hammered the stock following the announcement it took brokerages a bit longer to downgrade the stock. J.P. Morgan Securities cut its rating from “overweight” to “neutral”  with Kevin Milota writing, “The filing contained a bundle of bad news that we believe will be the point of capitulation for many of the frustrated bulls who have been extremely patient with Hertz until this point.” The brokerage also lowered its target price from $32 to $25.

Deutsche Bank also downgraded the stock from “buy” to “hold” with analyst Chris Woronka writing in a note to investors, “We think catalysts for the stock to regain momentum are extremely limited in the near term.”

Wells Fargo didn’t change its rating of the stock but did feel the need to express its disappointment. “What’s frustrating to us is (Hertz) is failing to capitalize on the favorable rental car industry dynamics,” Wells Fargo Securities analyst Richard Kwas wrote in a note. “The heat is on.”

Recalls hurt, but not the whole story

General Motors Company (NYSE:GM) certainly hasn’t done any favors to Hertz Global Holdings, Inc. (NYSE:HTZ) as the economy improves and the demand for rental cars rises. GM has recalled 25.7 million cars already this year and represents 28% of Hertz’s fleet of cars in the United States. Somewhat frightening is the fact that rental car companies are not required by law to follow recalls made by automakers but the company and others declared decisively in 2012 that they would not put drivers behind the wheel of faulty cars.

In the filing yesterday Hertz spoke of the recalls of April and June as having “stepped up substantially” and that it “experienced a rapid, substantial increase in contracted bookings, further widening the gap between supply and demand.”

In addition to the recalls the company is struggling with soft demand in its equipment rental business which will split from the car rental business this year. Its acquisition of Dollar Thrifty Automotive Group, Inc. (OTCMKTS:DTGF) in 2012 has not been properly integrated yet owing to delays in the installation of a computer system.

Hertz has yet to file financial results for the first and second quarters of this year and has delayed earnings calls no less than four times since it found accounting errors which keep the company from relying on the last three years of financial statements.

In extended trading yesterday, Hertz Global Holdings, Inc. (NYSE:HTZ) at one point had coughed up 18% of its share price but recovered to a loss of 12.4%. Presently (11:12AM EDT), the stock is trading at $27.99 after opening at $27.55 for a modest gain.