As the completion of Cleanaway Waste Management’s acquisition of Suez Sydney is nearing, Morgans lifts earnings forecasts materially. However, the valuation impact is considered immaterial, given the size and the limited-life nature of key assets acquired.
The target price rises $2.75 from $2.53 and the Hold rating is maintained. The analyst assumes debt funds the acquisition (the company has established a $500m acquisition debt facility), and free cashflow is used to pay down the acquisition debt.
Sector: Commercial & Professional Services.
Target price is $2.75.Current Price is $2.94. Difference: ($0.19) – (brackets indicate current price is over target). If CWY meets the Morgans target it will return approximately -7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
