Analyst Sees Upside In Clean Harbors, Cites Sizeable Fleet, Margin Gains & Accretive M&A As Catalysts

Truist Securities analyst Tobey Sommer initiates Clean Harbors, Inc. CLH coverage with a Buy rating and $165 price target.
The analyst expects the environmental and industrial services provider to gain from a "sizeable fleet" of specifically outfitted vehicles (15th largest domestic vehicle fleet).
Clean Harbors is also expected to gain from increased funding for environmental and infrastructure programs.
The analyst notes that the company will have structural margin gains in Safety-Kleen Oil, above-trend pricing increases in environmental services, and increased national focus on PFAS.
In addition, Clean Harbors' physical infrastructure creates a unique moat for a services business and should afford prospects for CPI-plus pricing increases in the coming years, the analyst notes.
Tobey expects rising oil prices to expand SKSS spreads. Clean Harbors is also deploying capital for accretive M&A. The company will also benefit from pricing gains, which is expected to drive margin expansion.
Truist Securities forecasts 3.6% organic revenue growth in 2023 and 3.9% in 2024.
On the oil side, modest growth in gallons processed with pricing will be the primary lever in revenue growth. The analyst's current model assumes an $81/bbl average Oil price in 2023 and 2024.
Price Action: CLH shares are trading higher by 0.27% at $143.69 on the last check Tuesday.

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