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Investing.com - Barclays initiated coverage on Montrose Environmental Group (NYSE:MEG) with an Overweight rating and a price target of $35.00 on Thursday. The stock, which has seen an impressive 86% surge over the past six months, currently trades at $29.43. According to InvestingPro analysis, MEG appears slightly undervalued based on its Fair Value estimates.
The research firm views MEG as offering "relatively inexpensive exposure to growth in environmental testing, monitoring, and remediation," noting that it trades at 12x NTM EV/EBITDA compared to approximately 15x for Barclays’ Waste coverage group. The company has demonstrated strong growth potential with revenue increasing 17.8% in the last twelve months, while maintaining a healthy current ratio of 1.78.
Barclays identified several potential upcoming catalysts for the stock, including second-half 2025 results, commencement or expansion of a share buyback plan, and potentially raised margin targets. With a gross profit margin of 41.2% and analysts expecting profitability this year, MEG shows promising fundamentals. Discover more insights and detailed analysis with a InvestingPro subscription, which includes exclusive ProTips and comprehensive financial metrics.
The firm also highlighted the possibility of "incremental commentary on a return to M&A activity," which could potentially occur by 2026.
Barclays’ $35 price target is based on applying a 13x multiple to Montrose Environmental Group’s cumulative third quarter 2026 through second quarter 2027 estimated adjusted EBITDA, less net debt.
In other recent news, Montrose Environmental Group reported strong financial results for the second quarter of 2025. The company achieved earnings per share of $0.63, which significantly exceeded the forecasted -$0.18. Montrose also reported revenue of $234.5 million, surpassing the expected $188.72 million. In another development, Montrose secured a five-year contract with a major energy firm to manage environmental remediation across Western Canada. This contract involves site assessments and reclamation work on legacy oil and gas assets, including aging gas fields and decommissioned facilities. The contract highlights Montrose’s continued expansion in the environmental services sector. These recent developments reflect the company’s ongoing growth and strategic positioning in the industry.
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