UPDATE: JPMorgan Downgrades Waste Management (WM) to Underweight
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JPMorgan analyst Stephanie Yee downgraded Waste Management (NYSE: WM) from Neutral to Underweight with a price target of $114.00.
The analyst comments "We rate WM Underweight with a Dec-21 price target of $114. WM is the largest solid waste company in North America. The company exhibits strong pricing discipline and has a number of initiatives to reduce costs and increase its wallet share with existing customers. WM’s pending acquisition of ADSW would add approximately 8% to the company’s 2021 revenue growth by our estimates (net divestitures), though our forecasts do not yet include ADSW which is expected to close in 3Q20. Solid waste volumes are improving as businesses reopen following COVID-19 related shutdowns, though the pace of recovery appears to have slowed. There are some customers that are operating below capacity such as restaurants, offices, and schools, while there are some businesses that have still not reopened including sports arenas, and possibly some that may not come back and would cancel service. Recognizing that commercial customers are the highest margin collection group and lower volumes should have a bigger impact on WM’s larger landfill network, we believe that our estimates reflect a reasonable level of continued recovery. Our Underweight rating reflects the stock’s current valuation level relative to our coverage group."
Shares of Waste Management closed at $114.97 yesterday.
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