Why did UBS upgrade Waste Management stock?

UBS upgraded Waste Management stock due to reduced leverage, improved free cash flow, and the anticipated resumption of share repurchases, signaling strong future growth.

What is Waste Management's new price target from UBS?

UBS set a new 12-month price target of $260 per share for Waste Management, indicating a potential 19% increase.

How is the WM Healthcare Solutions integration progressing?

The integration of WM Healthcare Solutions is progressing better than expected, with synergies being realized on or ahead of schedule.

Home / Business and Economy / UBS Predicts 19% Upside for Waste Management Shares

UBS Predicts 19% Upside for Waste Management Shares

9 Jan

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Summary

UBS upgraded Waste Management stock to buy with a $260 price target.
Reduced leverage and upcoming share repurchases are key growth drivers.
Integration of WM Healthcare Solutions is progressing better than expected.

UBS Predicts 19% Upside for Waste Management Shares

Waste Management's stock has received a significant boost following an upgrade from UBS, which now recommends a 'buy' rating. The bank has increased its 12-month price target to $260 per share, forecasting an approximate 19% increase from current levels. This positive outlook is underpinned by the company's successful completion of major investments and a reduction in leverage, leading to improved free cash flow.

Analyst Jon Windham pointed to the company's ongoing multi-year investment cycle as a primary driver for the upgrade. He anticipates that the resumption of share repurchases, which were paused in the first quarter of 2024, will substantially increase capital returned to shareholders. Historically, similar investment cycles have led to a notable increase in Waste Management's relative valuation.

Furthermore, the integration of WM Healthcare Solutions, acquired in 2024, is reportedly progressing ahead of schedule, with synergies being realized faster than projected. Windham's target price reflects an EBITDA multiple slightly above the company's five-year average, accounting for periods where enhanced capital returns have historically supported a premium valuation.