On Wednesday, Truist Securities maintained a Buy rating on shares of Clean Harbors (NYSE:CLH), with a price target of $280.00, representing potential upside from the current price of $239.54. The $12.91 billion market cap environmental services provider hosted a group visit at its headquarters in Norwell, Massachusetts, where the firm's analysts expressed increased confidence in growth prospects.
The visit included discussions with Clean Harbors' CFO Eric Dugas and VP of Investor Relations Jim Buckley. According to InvestingPro data, analysts maintain a bullish consensus on the stock, with price targets ranging from $250 to $325.
The firm's confidence stemmed from several key points discussed during the visit. Firstly, they believe that Clean Harbors can achieve mid-single-digit or higher pricing growth, despite the challenges posed by increased capacity. This optimism is supported by the company's current revenue growth of 8.37% and strong financial health score of "GOOD" from InvestingPro.
Secondly, they identified several long-term drivers for environmental services demand, including per- and polyfluoroalkyl substances (PFAS) management, the trend of re-shoring manufacturing, and increased infrastructure spending.
Moreover, Truist Securities highlighted that Clean Harbors' strategic initiatives and pricing power could potentially counteract margin pressures in the Safety-Kleen Sustainability Solutions (SKSS) segment, which has been facing weaker base oil pricing.
The $280 price target is based on a 13 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple on the firm's 2026 estimates. Truist Securities suggests that the implied 13 times multiple for GFL Environmental's (NYSE:GFL, Buy) Environmental Services business could act as a valuation benchmark for Clean Harbors.
In other recent news, Clean Harbors has been making notable strides in its market position. The company's recent earnings report showed a year-over-year revenue increase of 12%, with its adjusted EBITDA rising nearly $47 million.
Notably, the Environmental Services (ES) segment saw a 13% revenue increase and a 15% rise in adjusted EBITDA. However, the Safety-Kleen Sustainability Solutions (SKSS) segment, while experiencing a 6% revenue rise, reported an $11 million shortfall against expectations.
TD Cowen initiated coverage on Clean Harbors with a Buy rating and a price target of $325.00, highlighting the company's leading role in the hazardous waste sector. BMO Capital Markets adjusted its price target for Clean Harbors to $273 from $281, while maintaining an Outperform rating. Both firms see potential for growth and margin expansion, particularly in the ES segment.
Clean Harbors has also shown interest in potential mergers and acquisitions to enhance its market position. The company ended Q3 with a cash balance of $595 million and plans to pursue acquisitions and share buybacks.
Looking ahead, Clean Harbors anticipates mid-single-digit organic revenue growth and adjusted EBITDA growth in the mid to high single digits for 2025. These recent developments indicate a positive outlook for the company's future.
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