Zinger Key Points
- Republic Services could execute to $500M in annual Solid Waste M&A spend over the next 8-10 years.
- The stock is trading at a ~10% discount to direct Solid Waste peers.
- Find out which stock just plummeted to the bottom of the new Benzinga Rankings. Updated daily—spot the biggest red flags before it’s too late.
Shares of Republic Services Inc RSG were climbing in early trading on Thursday.
The stock is trading at a discount of around 10% to its direct Solid Waste peers, while the company's growing Environmental Services platform has the potential for margin expansion, according to Truist Securities.
The Republic Services Analyst: Tobey Sommer upgraded the rating Republic Services for from Hold to Buy, while raising the price target from $192 to $220.
The Republic Services Thesis: While the company’s Environmental Services segment offers pricing-led growth, there are opportunities for accretive mergers and acquisitions (M&As), Sommer said in the upgrade note.
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Republic Services could execute to $500 million in annual solid waste M&A spend over the next eight to 10 years, Sommer added.
"We see additional opportunity adding to the growing ES platform with an estimated ~$18B in private ES revenues," the analyst wrote. The company is likely to raise its 2024 guidance when it announces its second-quarter earnings next month, he said.
"Leverage has now declined to 2.8x, the lowest in the group, and we believe the company has a wide pipeline of accretive tuck-in opportunities in Solid Waste, Recycling and Environmental Services," Sommer further stated.
RSG Price Action: Shares of Republic Services had risen by 0.67% to $198.20 at the time of publication on Thursday.
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