Buy gold, crypto and China, tread carefully on rich U.S. tech: BofA’s Hartnett
On Friday, JPMorgan adjusted its stance on GFL Environmental (NYSE:GFL), downgrading the stock rating from Overweight to Neutral. The firm also increased its price target for GFL Environmental to $54.00, up from the previous $51.00. The revision follows a significant re-rating of the company’s shares, which have seen a multiple expansion to a current EV/EBITDA of 15.72x. The stock has demonstrated remarkable performance, delivering a 56.19% return over the past year, though InvestingPro analysis suggests it may be slightly overvalued at current levels.
The re-rating occurred as GFL Environmental sold its Environmental Services business to private equity owners, retaining a 44% stake with an option to repurchase it in 2029. This strategic move allowed the company to reduce its leverage to levels comparable with its industry peers, approximately 3x. Management has been aggressively buying back shares, as highlighted by InvestingPro’s analysis, which shows high shareholder yield and demonstrates the company’s commitment to returning value to shareholders—a significant shift from previous market concerns about private equity ownership.
JPMorgan acknowledged the company’s improved cash conversion as a percentage of EBITDA. However, the firm anticipates that GFL Environmental’s EBITDA margins may lag behind those of its peers in the medium term due to its lower landfill ownership. Despite this, the implementation of Extended Producer Responsibility (EPR) in Canada is expected to provide a near-term boost in volume.
Looking ahead, JPMorgan noted that GFL Environmental has considerable capacity for growth through low-risk, highly accretive tuck-in solid waste acquisitions. This strategic approach could potentially enhance the company’s market position and financial performance in the long term.
In other recent news, GFL Environmental has reported significant developments that could impact its future trajectory. The company exceeded expectations in the first quarter, with earnings surpassing targets by $14 million, prompting Citi analysts to raise their price target from $53.00 to $56.00 while maintaining a Buy rating. Additionally, GFL Environmental has resumed its share buyback program, authorized to repurchase up to 28,046,256 subordinate voting shares over a 12-month period. This follows the Ontario Securities Commission’s approval, allowing the company to repurchase shares from underwriters in Ontario, using proceeds from the sale of its Environmental Services business.
In another positive development, GFL Environmental announced a 10% increase in its quarterly dividend, raising it from US$0.014 to US$0.0154 per share. Jefferies also raised its price target for GFL Environmental to $55.00, maintaining a Buy rating, citing the company’s conservative guidance on revenue and EBITDA as a basis for potential outperformance. The analyst noted that GFL Environmental’s Investor Day presentation highlighted achievable plans and operational efficiency. These recent developments reflect GFL Environmental’s strategic efforts to enhance shareholder value and maintain financial discipline.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.