Bernstein initiated coverage of Republic Services (RSG) with a Market Perform rating and $205 price target The firm notes Republic is the second-largest operator in Waste and benefits as the safest pure-play exposure to an improving Waste Industry. Sustainability investments also carry less risk, done through JVs with industry leaders, making them attractive on a risk-adjusted basis. Its margin outlook has improved as well, with management successfully shifting its contracts away from CPI-based pricing towards higher margin open-market pricing, which Bernstein estimates to be an 25-35bp annual EBITDA margin improvement. However, valuation is fair on an absolute basis and expensive versus peers, adds the firm.
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