On Monday, Oppenheimer maintained its positive stance on Waste Connections Inc . (NYSE:WCN), raising the stock's price target to $180 from the previous $170 while keeping an Outperform rating. The decision to increase the price target came after investor meetings with the company's CFO, Mary Anne Whitney, on the West Coast.
The meetings highlighted Waste Connections' potential for margin growth beyond previous peaks and a positive outlook for mergers and acquisitions (M&A), with an expanding total addressable market (TAM) that could foster increased activity.
The discussions also pointed to macroeconomic trends that are likely to normalize in the medium term, aligning with the company's sustainable long-term business model. This model anticipates 4-6% price-led organic growth, approximately 2% growth from M&A, margin expansion of 30-50 basis points, 10% EBIT growth, and double-digit free cash flow per share growth.
The analyst from Oppenheimer noted that the sector's performance has been particularly strong at the start of the fiscal year 2024. The firm believes that the company's M&A prospects, margin trajectory, and favorable relative valuation are factors that could drive the stock's price upward, justifying the increased price target.
Waste Connections, a leader in non-hazardous waste collection, disposal, and recycling services, has been actively engaging with investors to communicate its strategic plans and financial goals. The company's focus on growth through both organic initiatives and strategic acquisitions has been a cornerstone of its business strategy.
The new price target of $180 reflects the firm's confidence in Waste Connections' ability to execute its business plan and capitalize on favorable market conditions. The Outperform rating suggests that the analyst expects the stock to perform better than the overall market or its sector in the near future.
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