Tuesday, Baird updated its outlook on Republic Services (NYSE:RSG), raising the waste management company's price target to $208 from $203, while retaining a Neutral rating on the stock. The revision reflects adjustments made due to increased Old Corrugated Containers (OCC) pricing observed in the second quarter of 2024, with average prices climbing by 9% quarter over quarter.
The firm noted a slight decrease in diesel fuel costs, which dipped by $0.12 per quarter, contrary to their initial expectation of stable prices. This reduction in fuel expenses has contributed to a modest elevation in the company's EBITDA forecasts.
The new price target of $208 is founded on a constant 15 times enterprise value to estimated 2025 earnings before interest, taxes, depreciation, and amortization (EV/2025E EBITDA) multiple. The analyst's commentary highlighted the key drivers for the updated target, emphasizing the impact of the commodity pricing on the company's financial projections.
Republic Services' stock performance and valuation are closely watched by investors, given its position in the waste management industry. The updated price target suggests a potential trajectory for the stock based on current and anticipated market conditions.
In other recent news, Republic Services has been a focal point in the financial world due to a series of analyst upgrades and price target adjustments. Truist Securities upgraded Republic Services from Hold to Buy, raising the price target to $220. This change reflects the company's potential for margin expansion, particularly within its Environmental Services platform.
Stifel maintained a Buy rating and raised the stock's price target to $215, based on the waste management company's potential for high-single-digit free cash flow growth. Deutsche Bank (ETR:DBKGn) reiterated its Hold rating on Republic Services, setting a price target of $203, and acknowledged Republic Services' role in the substantial environmental services industry.
InvestingPro Insights
With Baird's recent price target adjustment for Republic Services (NYSE:RSG), investors may find additional context through real-time metrics and insights from InvestingPro. Republic Services has demonstrated a consistent commitment to shareholder returns, raising its dividend for 21 consecutive years, a factor that may appeal to income-focused investors. Analysts have taken a positive stance on the company's earnings outlook, with 5 analysts revising their earnings upwards for the upcoming period, indicating potential confidence in the company's financial trajectory.
InvestingPro data shows Republic Services with a market capitalization of $64.59 billion and a P/E ratio of 35.93, which reflects a premium valuation in the market. The company's revenue growth for the last twelve months as of Q1 2024 stood at 7.95%, underscoring its steady business expansion. Despite a high P/E ratio relative to near-term earnings growth, Republic Services maintains a strong position within the Commercial Services & Supplies industry, with a notable 34.02% one-year price total return, highlighting its past performance.
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