Waste Management, Inc. (NYSE: WM) has likely found a new friend on Wall Street. The independent research firm Argus raised its rating on the waste management services giant to Buy from Hold, with a $57 price target. The upgrade comes on the heels of its shares having underperformed over the past quarter with a drop of about 8%.

Argus noted that Waste Management shares are trading near the mid-point of their 52-week range and are still down about 10% from the all-time high.

Waste Management matters to 24/7 Wall St. as well. It was recently named as a new alternative to rival Republic Services in our own 10 Stocks to Own for the Next Decade.

The firm further said that it had been looking for such a pullback as an opportunity to direct its clients to jump in on a buying opportunity. Additionally, management has said that it believes the higher-margin collection and landfill businesses are poised for growth. Also, Waste Management has accelerated its share repurchase program.

Argus raised its earnings estimates to $2.55 from $2.52 per share for 2015, and raised estimates for 2016 to $2.80 from $2.68 per share. As far as that near-term opportunity, Argus said:

The waste management industry is traditionally volatile, and Waste Management may not stay on the Buy list for long. Still, we think the recent selloff has been overdone and we see value in Waste Management to $57 per share. The shares also provide a current yield of about 3.2%.

If Argus is correct, then Waste Management has an implied upside of close to 20% if you consider the total return with dividends.

Management reiterated its free cash flow forecast of $1.4 billion to $1.5 billion, with revenue growth, based on its collection and disposal business, of around 2%. Total new business in the commercial and industrial portions of the Collection segment exceeded lost business for the first time in three years, and they expect positive momentum from
the Collection and Landfill businesses in the second half of 2015.

After having previously suspended its accelerated share repurchase plan, Waste management repurchased $300 million of its stock in the second quarter and is now anticipating repurchases of another $300 million in the third quarter. Also in buying stock, CEO David Stein personally repurchased $2 million of common stock in the second quarter. The company buybacks are partly funded by the proceeds from its Wheelabrator divestiture.

One issue was also noted around the recycling market. Argus’ report said:

China’s new “Green Fence” initiative, which bans imports of dirty or low-grade recyclables, has proved challenging for many of the recycling companies that sell scrap materials to China. While companies that have invested in higher-quality recycling processes and pollution controls are faring better, others have been forced to invest time, labor and capital to remove residual waste from recyclables and improve the quality of inbound materials. This has had a meaningful impact on volumes.

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Waste Management shares are trading at 17.5-times the Argus 2016 EPS forecast. The firm’s $57 target price implies a projected 2016 multiple of 20.4. Shares closed up 2.25 at $50.16 on Tuesday against a consensus analyst price target of $55.75.

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