Scotiabank Initiates Coverage of Republic Services with Caution

A recent report highlights Scotiabank's initiation of coverage for Republic Services, assigning a 'Sector Perform' rating. Analysts predict a potential upside of nearly 10%, though projected revenue shows a slight decline, indicating mixed sentiments around this stock.

Date: 05-10-2024

AI Rating: 5

The report indicates that Scotiabank has launched coverage on Republic Services (NYSE:RSG) with a recommendation classified as 'Sector Perform'. This suggests a cautious outlook from the covering institution. The price forecast average suggests a 9.97% upside, projecting the average price target at $220.59 per share compared to the recent closing price of $200.58.

However, despite the optimistic price target, the report notes a projected annual revenue of $15,445 million for Republic Services, indicating a decrease of 0.79% from previous figures. This revenue decline could raise concerns regarding the company's growth prospects moving forward.

The analysis also reveals the anticipated non-GAAP EPS (Earnings Per Share) is projected at 5.73, providing a baseline for profitability expectations. Additionally, the report highlights institutional sentiment with an increase in the number of funds reporting positions in Republic Services, which grew by 2.01% in the last quarter. Total shares owned by institutions witnessed a rise of 4.11%, which might reflect a strong belief in the company's stability despite the revenue dip.

However, the put/call ratio of 1.11 indicates a bearish sentiment in the options market, potentially foreshadowing some caution among investors regarding near-term performance. Overall, while there are positive indicators such as institutional buying and a favorable price projection, the anticipated revenue decline coupled with mixed options sentiment creates an environment where stock price may experience volatility.

Stocks: RSG