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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