北美环境服务业：获取选择性

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1、ABGlobalResearch4April2019EquitiesNorthAmericaEnvironmentalServicesGeneralIndustrialServicesAmericasGettingselectiveNarrowingfocuswithinEnvironmentalServicescoverageTheunderlyingfundamentalsandconsolidationstoryremainsintactinourview.However,withthestockstradingat10-

2、yearpeakP/EmultiplesrelativetotheS&P500wenarrowourfocustostockswithcompanyspecificdrivers.OurtworemainingBuyrecommendationsareWCNwithacquisitiondrivengrowthandADSWwithde-leveringdrivenmultipleexpansion.WedowngradeWMfromBuytoNeutralfollowing17%priceappreciationYTDresul

3、tinginneartroughFCFyieldandlessfavorablerisk/reward.WeupgradeECOLtoNeutralfollowinga12%YTDsharepricedeclinedrivingthetightestFCFyieldspreadtoMSWinoverayearprovidingrelativelybetterrisk/reward.GrowthoutlookupgradedsinceJanuaryWeincreaseourindustrybaseEBITDAmultiplefrom

4、10.0xto10.5xacrossourcoverageduetoupwardrevisionsinunderlyingeconomicgrowthexpectations.Theaverageincreasetoourpricetargetsis6%.Sincethebeginningoftheyear,theFed'smedianexpectationfor2019ratehikeshasdeclinedto0from3previously,removingaheadwindto2019housingstarts,akeyM

5、SWleadingindicatorinourview.Inaddition,UBSeconomicanalystSethCarpenterexpectseconomicgrowthtoinflectinQ2andQ3followingarelativelyweakQ1.TheUBSeconomicforecastforU.S.industrialproductionhasbeenrevisedfrom1.7%in2019Eand1.6%in2020EasofJanuary9th2019to2.3%in2019Eand1.5%in

6、2020EasofMarch29th2019.FundamentalsremainpositiveWeforecast10%averageadj.EBITDA/shgrowthin2019,acceleratingfrom6%in2018drivenbytheremovaloftherecyclingheadwindexperiencedin2018andthecarryoverimpactofhighM&Aactivityin2018.Wecontinuetoexpectindustryconsolidated,stablede

7、mandandlowriskoftechnologicaldisruptiontoremainkeyattractionsforincrementalinvestors.However,weexpectvaluationtobeaheadwindtosector-widecontinuedout-performance.Figure1:SummaryofpricetargetandratingchangesCompanynameTickerNewratingOldratingNewpricetargetOldpricetarget

8、AdvancedDisposalADSWBuyBuy3330WasteConnectionsWCNBuyBuy10096WasteConnectionsWCN-TSEBuyBuy133127RepublicServicesRSGNeutralNeu