Cleanaway Waste Management’s guidance to a flat first half is disappointing, Macquarie concedes, but not deserved of the subsequent -13% sell-off. The second half should see improvement thanks to price increases, cost reductions and hopefully, as the broker puts it, stable commodity prices.
The broker likes the underlying structural growth opportunity in waste management and notes Friday’s fall brings the stock back in line with its 10-year average relative PE, and to a -13% discount to global peers.
Target falls to $2.50 from $2.60, Outperform retained.
Sector: Commercial & Professional Services.
Target price is $2.50.Current Price is $1.83. Difference: $0.67 – (brackets indicate current price is over target). If CWY meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges – negative figures indicate an expected loss).
