JPMorgan Downgrades GFL Environmental (GFL) to Neutral, Lifts PT

On May 23, JPMorgan adjusted its stance on GFL Environmental Inc. (NYSE:GFL)’s stock from “Overweight” to “Neutral”. However, the firm has increased its price objective to $54.00 from the prior target of $51.00. The re-rating took place after the company sold its Environmental Services business to private equity owners.

An excavator at a landfill site operating amidst a pile of solid waste.

GFL Environmental Inc. (NYSE:GFL) retained a $1.7 billion equity interest in the business. The company plans to use up to $3.75 billion of net proceeds from this transaction to repay debt. JPMorgan noted GFL Environmental Inc. (NYSE:GFL)’s improved cash conversion as a percentage of EBITDA. That being said, there are expectations that its EBITDA margins might trail peers over the medium term as a result of its lower landfill ownership.

However, the implementation of Extended Producer Responsibility (EPR) in Canada can result in a near-term volume boost. Looking ahead, JPMorgan believes that GFL Environmental Inc. (NYSE:GFL) possesses significant capacity for growth with the help of low-risk, highly accretive tuck-in solid waste acquisitions.

This strategic approach can help enhance its market position and financial performance over the long term. GFL Environmental Inc. (NYSE:GFL) offers non-hazardous solid waste management and environmental services.

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Disclosure: None.