United Rentals' (URI) Q1 beat and outlook raise were driven by strong execution on large projects and cost reductions, UBS Securities said.

The company reported Q1 adjusted earnings late Wednesday of $9.71 per diluted share, up from $8.86 a year earlier. Revenue increased to $3.99 billion from $3.72 billion. United Rentals also raised its 2026 revenue outlook to between $16.9 billion and $17.4 billion, from $16.8 billion to $17.3 billion earlier.

UBS said in a Thursday note that margin performance in Q1 was better than expected. Rental gross margins and general rental margins rose year over year while specialty margins remained under pressure but improved sequentially. Headwinds from repositioning costs were also significantly lower than a year earlier.

Non-residential construction spending is expected to accelerate in the second half of the year, driving EBITDA growth. However, UBS noted there could still be project-related variability later in the year.

The firm reiterated its buy rating on United Rentals and a $1,205 price target.

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