UPDATE: Goldman Sachs Starts Waste Connections Inc. (WCN) at Buy
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(Updated - November 1, 2016 9:45 AM EDT)
Goldman Sachs initiated coverage on Waste Connections Inc. (NYSE: WCN) with a Buy rating and a price target of $90. Analyst Brian Maguire noted its differentiated strategy, superior margins and FCF generation.
"We favor WCN’s differentiated strategy that focuses on maintaining high waste collection margins by operating primarily in secondary (suburban and rural) and exclusive (franchise-based) markets. Through this strategy, WCN has been the most successful in our coverage in pricing with a 2.7% average annual yield since 2011 (twice the 1.4%/1.3% averages for WM/RSG) while still posting the fastest organic volume growth (five-year average growth of 1.0%). This model also generates the highest margins (33.6% EBITDA margin), returns (9.9% CROCI), and cash conversion (FCF is 50% of EBITDA and over 15% of sales)," said the analyst.
Shares of Waste Connections Inc. closed at $75.21 yesterday.
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