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On Tuesday, Citi analysts, led by Bryan Burgmeier, increased their price target on shares of GFL Environmental (NYSE:GFL) from $53.00 to $56.00, while reiterating a Buy rating on the stock. According to InvestingPro data, analyst targets range from $28.28 to $62.27, with the stock currently trading at $48.68. The adjustment follows GFL Environmental’s robust performance in the first quarter and the reaffirmation of its 2025 outlook.
The company’s solid waste operations have been streamlined, which, coupled with a reduction in net leverage and private equity overhang after the sale of its Environmental Solutions (ES) business, positions GFL Environmental favorably for the future. The first quarter results surpassed expectations by $14 million compared to the implied target, which has contributed to the analysts’ positive outlook. InvestingPro analysis shows the company’s impressive 50.31% return over the past year, with net income expected to grow this year despite current unprofitability.
GFL Environmental has also reported $85 million in acquired annualized revenue year-to-date, with only about a third of this figure reflected in current guidance. With a target of $700-$900 million in mergers and acquisitions spending per annum, the company could potentially meet or exceed the higher end of its guidance range by 2025, based on its current pipeline. The company’s revenue growth has been strong, with InvestingPro data showing an 11.78% increase in the last twelve months to $5.55 billion.
Moreover, GFL Environmental has seen margin expansion that has exceeded Citi’s projections. The company’s underlying net price increased by 110 basis points year-over-year to 27.3%. This improvement was supported by an additional workday, favorable commodity prices, foreign exchange rates, and contributions from mergers and acquisitions. InvestingPro data shows a gross profit margin of 19.24%, with these gains partially offset by headwinds from royalty payments in the first quarter of 2024 and accruals related to the ES segment.
In other recent news, GFL Environmental Inc. reported a 10% increase in its regular quarterly cash dividend, raising it from US$0.014 to US$0.0154 per share. This dividend will be distributed to shareholders on record as of April 14, 2025. Additionally, the company has resumed its share buyback program, authorized to repurchase up to 28,046,256 subordinate voting shares over the next 12 months, with 20,427,498 shares still available for repurchase. In another development, GFL has received approval from the Ontario Securities Commission to buy back shares from underwriters in Ontario, using proceeds from the recent sale of its Environmental Services business. Analyst updates reveal that Jefferies has raised its price target for GFL Environmental to $55, maintaining a Buy rating, citing the company’s potential to outperform its financial projections. Meanwhile, BMO Capital Markets increased its price target to $48, keeping a Market Perform rating, suggesting that GFL’s valuation does not yet warrant a more bullish stance despite potential growth opportunities. These recent developments highlight GFL’s strategic initiatives and investor interest in the company’s performance.
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