On Friday, Stifel, a financial services company, adjusted its price target on shares of Enviri Corp. (NYSE:NVRI), a waste management company, to $13.00, down from the previous target of $15.00. The firm maintained its Buy rating on the stock, which was trading at $7.06 at the time of the announcement.
The revised price target comes with an analysis of the company's financial health and market performance. Stifel noted that for Enviri's shares to perform well, the company would need to achieve an annual compounding rate of 2% to 4% and improve its margins back to 20%. Clean Earth, a division of Enviri, is expected to maintain a 15% margin and see a sales growth of 6% to 8%, attributed almost equally to price and volume increases.
Looking ahead, Stifel anticipates that by 2025, the growth rate and operating leverage will be positively influenced by per- and polyfluoroalkyl substances (PFAS) treatment, which is becoming an increasingly significant aspect of Enviri's business. PFAS are a group of chemicals that have come under scrutiny for their environmental and health impacts, and their treatment is expected to be a growth area for the company.
Furthermore, the update indicated that Enviri's rail segment is no longer listed as a discontinued operation. Stifel projects that this part of the business should operate at an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $30 million to $40 million. The company's goal remains to sell this segment.
Lastly, the firm addressed Enviri's leverage, noting that while the guidance on leverage is reducing more slowly than anticipated, internal efforts to drive incremental debt repayments may accelerate the process, potentially bringing leverage down to 3.75 times, compared to the current ratio of nearly 4 times.
InvestingPro Insights
As investors consider Stifel's revised price target on Enviri Corp. (NYSE:NVRI), InvestingPro data offers a snapshot of the company's current financial standing. Enviri Corp. holds a market capitalization of $649.06 million, with a negative P/E ratio of -12.03, reflecting challenges in profitability. Over the last twelve months as of Q4 2023, the company generated revenue of $2.07 billion, marking a growth of 9.54%, and a gross profit margin of 21.05%. Despite these growth figures, the company's stock has experienced significant volatility, with a 1-week price total return of -12.73% and a 3-month return of -18.57%, underscoring the cautious sentiment echoed in the InvestingPro Tips.
Two particular InvestingPro Tips are pertinent to the article's context. First, Enviri operates with a significant debt burden, which aligns with Stifel's commentary on the company's leverage. Second, analysts do not anticipate Enviri will be profitable this year, a crucial factor for investors expecting a turnaround in the company's financial performance. These insights, coupled with the fact that Enviri does not pay a dividend, might influence investor decisions, especially those looking for immediate returns or income from their investments.
For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available, providing deeper insights into Enviri's financial health and market performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full suite of tips to inform your investment strategy.
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