On Monday, UBS upgraded Cleanaway Waste Management (NYSE:WM) (CWY:AU) (OTC: TSPCF) stock, shifting the rating from Neutral to Buy. The firm also increased the price target on the stock to AUD3.30, up from the previous target of AUD2.80.
The upgrade was influenced by a reassessment of the company's growth strategy and operational improvements. The analyst noted that there had been skepticism regarding Cleanaway's ability to implement broad optimization initiatives, especially in the context of previously low labor availability.
However, with labor conditions largely normalized—including stable industry employment, low single-digit wage growth, and Cleanaway's job advertisements returning to pre-COVID levels—UBS now views the company's growth targets as realistic.
Cleanaway Waste Management has shown solid operational improvement, which has contributed to the more positive outlook. The analyst's comments reflect a change in sentiment, as the consensus had been unconvinced about the company's ability to meet its "mission 500" goal of achieving $500 million in EBIT by the fiscal year 2026.
The peer analysis conducted by UBS suggests that Cleanaway's targets are achievable, supporting the firm's decision to upgrade the stock. The current industry employment trends and wage growth have also played a role in this reassessment, indicating a more favorable environment for the company's optimization efforts.
UBS's new price target of AUD3.30 reflects the firm's confidence in Cleanaway Waste Management's potential to reach its EBIT target of $500 million in FY26, as outlined by the CEO in the company's growth strategy.
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