The business services sector is drawing attention from equities analysts as companies pursue targeted operational changes to drive margins and cash flow. Jefferies has singled out two names it views as particularly well positioned to benefit from these initiatives: Casella Waste Systems (NASDAQ: CWST) and Rollins (NYSE: ROL).
Casella Waste Systems
Jefferies points to a set of operational actions at Casella focused on fleet upgrades, labor optimization and a transition of systems and technology as the primary levers that should unlock cost savings, pricing power and margin expansion. The firm highlights a specific $5 million synergy target attributed to fleet upgrades and automation benefits alone. In addition, Jefferies quantifies at least another $5 million of potential upside - roughly 20 basis points - coming from systems and technology transitions and improved pricing.
Following its assessment, Jefferies moved Casella to a Buy rating. The upgrade reflects what the firm describes as an attractive setup for 2026 driven in part by a valuation reset: Casella is trading at about 31x price-to-free cash flow versus a historical average near 38x, according to Jefferies’ analysis. The firm also notes that Mid-Atlantic integration challenges that had previously acted as headwinds are now on track to become tailwinds as integrations progress.
Recent analyst activity around Casella has been mixed, underlining differing views in the market. Stifel has reiterated a Buy rating, while JPMorgan initiated coverage with a Neutral rating. Management changes at the company include the appointment of Edmond R. 'Ned' Coletta as the new Chief Executive Officer.
Rollins
For Rollins, Jefferies maintained its Buy rating and characterized the company as a "best in class" diversified services compounder. Jefferies points to a number of execution elements behind this view: increased sales hiring, disciplined pricing actions, expanded commercial reach and a diversified approach to customer acquisition. These initiatives are supporting organic growth that the firm says remains above pre-COVID levels.
Jefferies expects Rollins to deliver EBITDA margins higher than its historical norms, indicating a reachable margin profile of about 25% compared with roughly 22% recorded in 2022. The firm regards Rollins’ premium multiple as justified by the combination of consistent high-single-digit organic growth, margin expansion and a balance sheet that affords flexibility.
Other broker activity has been supportive of Rollins’ outlook. Morgan Stanley upgraded the stock to Overweight, and both UBS and RBC Capital raised their price targets. In parallel with the analyst activity, Rollins’ Board declared a regular quarterly cash dividend of $0.1825 per share.
How the two stories compare
Jefferies’ selections illustrate two distinct ways value can emerge in business services. Casella’s case centers on integration and operational improvements expected to yield explicit synergies and pricing leverage, while Rollins’ thesis rests on sustained organic growth and margin expansion supported by sales investment and pricing discipline.
Both companies are cited as examples of how focused operational execution and disciplined capital allocation can drive shareholder value in the broader business services sector.