Why KeyBanc Sees Advanced Drainage As A Top ESG Stock: Revenue And EPS Predictions For FY24 And FY25

KeyBanc Capital Market analyst Jeff Hammond initiated coverage on Advanced Drainage Systems Inc WMS with an Overweight rating and price target of $150.

The analyst sees WMS as a highly attractive pure-play water management business that consistently delivers above-market returns. 

The analyst expects the company to deliver +200-300 bps of market outgrowth in the long-term, led by plastic products' competitive advantages (>20% cheaper to install; >2x faster installation) compared to legacy materials (PVC/concrete) despite expected non-residential headwinds in the near term.

Hammond expects margin improvement ahead of the company’s current long-term targets, led by continued organic investments for improving manufacturing processes (i.e., automation) and implementing the Infiltrator Water Technology (IWT) playbook to the broader businesses.

Notably, for FY24, Advanced Drainage expects net sales of $2.60 billion-$2.80 billion (vs. consensus of $2.85 billion) and adjusted EBITDA of $725 million- $825 million. 

KeyBanc thinks WMS has the most attractive ESG story among the stocks in its coverage.

The analyst expects revenues and EPS of $2.70 billion and $5.00 in FY24 and $3.03 billion and $6.10 in FY25, respectively.

Also Read: Advanced Drainage Stock Is A Top Pick Despite End-Market Weakness: Bullish Analyst Highlights Solid Margin Profile

Price Action: WMS shares are trading higher by 0.76% at $121.76 on the last check Monday.