Oppenheimer has made adjustments to its financial outlook for Waste Connections Inc . (NYSE: NYSE:WCN), increasing the price target to $194.00 from the previous $191.00, while retaining an Outperform rating on the stock.
The firm anticipates that the company's upcoming third-quarter 2024 earnings report will set the tone for the industry's expectations for the fiscal years 2024 and 2025.
The company's shares have reportedly performed on par with the average of its peers in the solid waste sector, though they have not kept pace with the broader market indices since the last earnings preview.
Oppenheimer highlighted several factors that could lead to positive revisions in estimates, including Waste Connections' recent closure of the Royal Waste acquisition and other potential deals that may close in the near term.
In other recent news, Waste Connections Inc. has seen a flurry of analyst activity following a strong second quarter. BMO Capital maintained its Outperform rating on the company, expressing a positive outlook and expecting continued momentum into 2025. BofA Securities also reaffirmed its Buy rating on Waste Connections, citing the company's shift to profitability and expectations of continued upside to free cash flow and earnings per share targets.
Citi raised its price target for Waste Connections to $190, maintaining a neutral rating, after a significant increase in EBITDA margins and an upward revision of 2024 revenue guidance. TD Cowen also raised its price target from $185 to $200, maintaining a Buy rating, highlighting the company's strong pricing capabilities and potential for sustained growth within the solid waste industry.
These recent developments come after Waste Connections reported an 11.2% increase in revenue and a 16.4% increase in adjusted EBITDA in the second quarter. The company's EBITDA margins rose by 150 basis points to 32.6% year-over-year, surpassing expectations. Waste Connections also revised its 2024 revenue guidance upwards by $100 million to $8.85 billion, following a strong performance in mergers and acquisitions.
Furthermore, Waste Connections anticipates a $200 million EBITDA contribution from renewable natural gas projects by 2026. The company also reported a significant decrease in voluntary employee turnover, with further reductions targeted.
InvestingPro Insights
Waste Connections Inc. (NYSE:WCN) continues to demonstrate strong financial performance, aligning with Oppenheimer's optimistic outlook. According to InvestingPro data, the company's revenue growth remains robust, with an 11.24% increase in the most recent quarter. This growth trajectory supports Oppenheimer's expectations for higher top-line growth in the coming years.
InvestingPro Tips highlight that Waste Connections has raised its dividend for 8 consecutive years, showcasing a commitment to shareholder returns. This is particularly noteworthy given the company's recent dividend growth of 11.76% in the last twelve months. The company's strong financial position is further evidenced by its profitability over the last twelve months and analysts' predictions of continued profitability this year.
While the stock is trading near its 52-week high with a price-to-earnings ratio of 54.68, investors should note that it's trading at a high earnings multiple relative to near-term growth expectations. This valuation suggests that the market has high expectations for Waste Connections' future performance, which aligns with Oppenheimer's increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Waste Connections, providing deeper insights into the company's financial health and market position.
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