Sunbelt Rentals Holdings (SUNB) is positioned to benefit from easing industry headwinds and an improving macroeconomic backdrop, with the company's Sunbelt 4.0 outlook appearing conservative, RBC Capital Markets said in a Friday note.

The analyst said improved equipment supply conditions since the start of the year could support a recovery in general tool rental rates, while easing depreciation-related margin pressure provides additional support for margins.

Sunbelt's long-term guidance implies very low general tool rental revenue growth through fiscal 2029, which RBC views as conservative, although excess equipment supply remains an unresolved issue, according to the report.

The firm added that softer comparisons related to storm activity remove one bearish factor, though RBC sees limited scope for a materially positive variance, while macro conditions could become more supportive for contractor sentiment.

RBC upgraded its rating on the stock to sector perform from underperform and raised its price target to $80 from $62.

Shares of Sunbelt Rentals were down about 2.8% in Monday trading.

Price: 83.85, Change: -2.21, Percent Change: -2.57