On Tuesday, Deutsche Bank (ETR:DBKGn) analyst issued an upgrade for Republic Services (NYSE:NYSE:RSG), changing the rating from Hold to Buy and increasing the price target to $237 from $219. The upgrade reflects a positive outlook on the company's performance, anticipating that the macroeconomic environment will be more favorable than previously expected in 2025.
According to InvestingPro data, RSG has demonstrated strong momentum with a 32.8% return over the past year, though current metrics suggest the stock may be trading above its Fair Value.
The analyst highlighted the resilience of high-quality stocks, like Republic Services, which tend to perform well across various macro scenarios. This resilience is supported by RSG's perfect Piotroski Score of 9 and consistently low price volatility, as revealed by InvestingPro analysis. Despite potential risks such as re-inflation and rising yields, the analyst remains optimistic about the ability of business and information services companies to overcome challenges.
The report also noted that many companies within the sector have managed to reduce their leverage to reasonable levels in the past two years. This de-leveraging, coupled with an expected improvement in free cash flow (FCF) conversion, is likely to result in higher cash returns for shareholders.
In addition to Republic Services, Deutsche Bank maintains Buy ratings on a number of other information services and waste management companies. These include S&P Global Inc. (NYSE:SPGI), MSCI Inc . (NYSE:NYSE:MSCI), TransUnion (NYSE:NYSE:TRU), Equifax Inc . (NYSE:NYSE:EFX), Fair Isaac Corporation (NYSE:NYSE:FICO), and Dun & Bradstreet Holdings, Inc. (NYSE:DNB) in the information services sector. In the waste management sector, the ratings for Waste Connections Inc (TSX:WCN) . (NYSE:NYSE:WCN) and Waste Management, Inc. (NYSE:NYSE:WM) remain at Buy.
Furthermore, the bank continues to recommend Buy ratings for Aramark (NYSE:ARMK) and Verra Mobility (NASDAQ:VRRM) Corporation (NASDAQ:VRRM), indicating a positive stance on these companies as well. The analyst's commentary suggests a broad confidence in the sector's capacity to reward investors amidst the expected economic conditions.
For a deeper understanding of Republic Services' position in the market, InvestingPro subscribers can access 12 additional ProTips and a comprehensive Pro Research Report, offering detailed insights into the company's valuation, financial health, and growth prospects.
In other recent news, Republic Services has seen significant developments. The waste management company has been upgraded to Outperform by BMO (TSX:BMO) Capital, which also set a new price target of $238.00, indicating confidence in the company's prospects. This upgrade is based on Republic Services' strong performance and strategic investments, particularly in electric vehicles (EVs) and recycling processing capabilities.
Additionally, TD (TSX:TD) Cowen has increased the price target for Republic Services to $220, maintaining a Hold rating on the stock. This adjustment reflects the firm's anticipation of a strong fourth quarter for the company, which is expected to be boosted by increased waste volumes from hurricane-related cleanups and decreasing costs.
In the third quarter of 2024, Republic Services reported a 7% revenue growth and a 14% rise in adjusted EBITDA. The company also expects to close over $200 million in acquisitions by year-end. These recent developments underscore Republic Services' resilience and strategic approach to sustained success in the waste management industry. The company anticipates meeting the high end of its adjusted EBITDA guidance for 2024, with a focus on growth into 2025.
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