On Friday, BMO (TSX:BMO) Capital adjusted its outlook on Waste Connections Inc (TSX:WCN) . (NYSE:WCN), raising the share price target to $186 from the previous $182 while maintaining an Outperform rating.
The firm anticipates that the company will see notable margin improvements within the next 12-18 months, a development that current consensus estimates may not fully reflect.
The firm's analysis suggests that Waste Connections is performing strongly and has a clear path toward enhancing its profit margins. This expectation is based on the company's current execution and the visibility of its operational plans. The improved margins are anticipated to materialize over the coming year to year and a half.
Furthermore, the heightened mergers and acquisitions (M&A) activity in the sector was highlighted as a potential catalyst for Waste Connections. The company is deemed to be in a strong position to leverage these opportunities, which could lead to an upward revision in forecasts.
The analyst from BMO Capital expressed confidence in Waste Connections' strategic positioning, stating:
"We believe WCN is executing well and there is improving visibility into achieving significant margin improvement over the next 12-18 months that is not fully captured in consensus estimates. M&A activity is elevated, and we believe WCN is well-positioned to capture significant opportunities which provides an upside bias to our forecast. We rate WCN Outperform."
InvestingPro Insights
As Waste Connections Inc. (NYSE:WCN) continues to receive optimistic forecasts from analysts, insights from InvestingPro provide a deeper look into the company's financial health and market performance. With a significant market capitalization of $42.62 billion, Waste Connections stands as a notable player in the industry. The company has demonstrated a strong revenue growth of 9.75% over the last twelve months as of Q1 2024, underlining its capacity for expansion and operational success.
InvestingPro Tips highlight that Waste Connections has a consistent track record of raising its dividend for 8 consecutive years, a testament to its financial stability and commitment to shareholder returns. Additionally, the company has been profitable over the last twelve months, which aligns with the positive outlook provided by BMO Capital. While the stock is trading at high valuation multiples such as a Price/Book ratio of 5.47, this could reflect the market's confidence in Waste Connections' future prospects, including its strategic positioning for M&A activities.
For those considering an investment in Waste Connections, there are 12 additional InvestingPro Tips available, offering a comprehensive analysis of the company's financial metrics and market performance. To gain further insights, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/WCN.
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