UBS Starts GFL Environmental (GFL) at Buy, 'We see a buying opportunity'

UBS analyst Jon Windham initiates coverage on GFL Environmental (NYSE: GFL) with a Buy rating and a price target of $44.00.

The analyst comments "We initiate coverage of GFL with a Buy rating and $44 PT. We see a buying opportunity with GFL shares trading near an all-time ~3.0x EV/EBITDA discount to peers and expect continued deleveraging to be a re-rating catalyst. We forecast a reduction of trailing net debt-to-adj. EBITDA to 3.5x by YE2025E from 4.9x currently. In our view, GFL is well positioned having already captured the pricing benefits of historical inflation and potentially exploiting a lower interest rate environment ahead of 2025 debt maturities. GFL shares underperformed the waste group by ~20% in 2H23, while GFL’s credit spreads compared to WM narrowed ~40% over the last 18-months. We expect the equity market to follow the bond market's lead in 2024 and narrow the equity valuation gap to peers. GFL has time optionality ahead of 2025 refinancing needs to 1) further reduce leverage; 2) achieve credit rating upgrades; 3) further reduce credit spreads; and 4) take advantage of a potentially lower 2024-25 interest rate environment."

For an analyst ratings summary and ratings history on GFL Environmental click here. For more ratings news on GFL Environmental click here.

Shares of GFL Environmental closed at $34.02 yesterday.

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