William Blair reiterates outperform rating on Waste Management stock

William Blair reiterated its Outperform rating on Waste Management (WM), projecting over $4 billion in free cash flow by 2027 and a 20%+ stock upside to $280-$285, citing the company's current valuation discount relative to peers and catalysts like sustainability investments. This positive sentiment is echoed by JPMorgan, which upgraded WM to Overweight with a $277 target, anticipating high single-digit revenue and EBITDA growth. Despite these bullish outlooks, WM recently reported Q1 2025 earnings and revenue below forecasts, though it achieved a 12% year-over-year increase in operating EBITDA.

Analysis

Waste Management (WM) presents a compelling long-term free cash flow growth narrative, supported by a consensus of bullish analyst ratings despite a recent quarterly performance miss. William Blair maintains its Outperform rating, forecasting free cash flow to exceed $4 billion by 2027, which translates to a potential stock upside of over 20% to a $280-$285 price target. This optimism is underpinned by a valuation argument, with WM's shares trading at a 10% discount to peers on a 2026 price-to-free cash flow basis (28x vs. 31x) and at a discount on an EBITDA multiple as well. This view is reinforced by JPMorgan's recent upgrade to Overweight with a $277 price target, citing expectations of high single-digit revenue and EBITDA growth. Key medium-term catalysts include sustainability investments and the successful integration of the Stericycle acquisition. However, this positive outlook is tempered by the company's first-quarter 2025 results, which missed both revenue ($6.02B vs. $6.15B forecast) and EPS ($1.58 vs. $1.69 forecast) estimates. The negative signal from this miss is partially offset by a strong 12% year-over-year increase in operating EBITDA during the same period, suggesting resilient underlying profitability and operational leverage.

Key Decisions for Investors

• Investors should weigh the bullish analyst consensus and strong free cash flow projections against the recent Q1 2025 earnings and revenue miss, which introduces execution risk to the near-term outlook.
• The current valuation, which represents a notable discount to solid waste peers on both P/FCF and EBITDA multiples, may present a strategic entry point for investors confident in the long-term growth story.
• Monitor the integration progress of the Stericycle acquisition and the performance of sustainability-related capital projects, as these are cited as primary medium-term catalysts for value creation.
• Pay close attention to upcoming quarterly reports to ascertain whether the Q1 top-line weakness was an anomaly or an early indicator of slowing growth, particularly in contrast to the sustained double-digit growth in operating EBITDA.