Morgans upgrades Cleanaway to 'add' on Contract Resources buyout

The news: Morgans has upgraded waste management group Cleanaway following the company's $377 million acquisition of industrial services provider Contract Resources Group last week.

The numbers: Morgans upgraded its rating on Cleanaway from 'hold' to 'add' and lifted its price target from $2.85 to $2.95. Cleanaway shares were last up 1.4% to $2.64.

The context: Morgans analyst Nathan Lead said the acquisition of Contract Resources — which remains subject to regulatory approval — is "appealing" given the price paid and how it helps Cleanaway get positioned for "the wave of oil and gas decomissioning, decontamination and remediation work expected to eventuate over time".

Cleanaway's recent share price decline has also improved its value attraction, Lead said.