Bernstein has released its preferred selections within the U.S. business services sector, focusing on firms it regards as having resilient pricing power and recurring revenue bases. The firm notes that high quality often commands premium valuations, but even with most names trading above S&P 500 multiples, it finds attractive risk-reward profiles in a handful of companies.
Waste Connections
Bernstein assigns Waste Connections an Outperform rating and a $205 price target, describing the company as the highest-quality solid waste operator covered by the firm. Key strengths cited include industry-leading margins, robust pricing power and disciplined merger-and-acquisition execution. Bernstein points to Waste Connections’ advantaged footprint concentrated in rural and secondary markets, and to its portfolio of exclusive municipal contracts as structural advantages supporting steady cash generation.
The research note highlights a recent valuation shift: Waste Connections is trading roughly at parity with larger peers Waste Management and Republic Services for the first time, after historically commanding about a 30% premium. Bernstein attributes the multiple compression largely to the Chiquita Canyon Landfill issue and treats that event as a transitory factor rather than a structural business impairment. The firm’s estimate places potential cleanup costs below $2 billion, a figure it contrasts with an implied de-rating versus peers of about $12 billion. On that basis Bernstein views current share levels as a compelling buying opportunity.
Operationally, Waste Connections reported first-quarter 2026 results that exceeded analyst expectations, recording earnings per share of $1.23 and revenue of $2.371 billion. Following the report, several brokerages, including BMO Capital, CIBC and Stifel, issued positive responses ranging from reiterations of favorable ratings to higher price targets.
Ferguson
Bernstein ranks Ferguson as an Outperform with a $310 price target, identifying the distributor as the best-positioned participant to serve a projected $1.5 trillion to $1.8 trillion U.S. data center build-out. The firm notes Ferguson’s market leadership across multiple categories, including Waterworks, Commercial/Mechanical, Industrial, and Fire & Fabrication, where it holds number one positions and category shares in the 23% to 26% range.
Bernstein emphasizes geographic advantages as well. It cites that roughly 70% of new data center square footage is expected to be built in five states where Ferguson maintains a strong presence, and observes the company is well placed to capture disproportionate spend as the industry transitions toward liquid-based cooling systems. Bernstein’s note references an industry trend estimate that liquid cooling will represent about 60% of newly constructed facilities by 2028. Ferguson’s management raised its estimate of the large capital project total addressable market to $90 billion in February 2026.
On results, Ferguson reported first-quarter 2026 net sales of $7.5 billion, a 3.6% increase year over year. The company also disclosed plans to delist from the London Stock Exchange in July 2026. In the wake of developments and market dynamics, Goldman Sachs downgraded Ferguson’s rating from Buy to Neutral.
Cintas
Bernstein assigns Cintas a Market-Perform rating with a $200 price target. The firm recognizes Cintas as a high-quality compounder, noting a long record of growth in sales and profits in 53 of the last 55 years. Bernstein also points out the company’s strong total shareholder return over the 2016-25 period, quantified in the firm’s note as an 814% return compared with a 235% return for the S&P 500.
Bernstein expects the pending UniFirst acquisition to deliver cost synergies of approximately $375 million by the fourth year following close, with savings identified across G&A, production costs, service costs and materials. Despite those potential efficiencies, the firm voices longer-term uncertainty around total addressable market estimates tied to the deal. That uncertainty helps explain the Market-Perform rating.
Procedurally, Cintas secured shareholder approval from UniFirst for the acquisition, but the transaction is now subject to additional regulatory review. The Federal Trade Commission has issued a second request for information related to the deal, creating delay and added uncertainty. Following news of the regulatory pause, Truist Securities reduced its price target for Cintas while retaining a Buy recommendation.
Context and investor takeaway
Bernstein’s coverage highlights differences in how operational strength, market positioning and deal-related risks shape outlooks across the business services complex. Waste Connections is framed as a high-quality waste operator undergoing a valuation adjustment tied to a specific landfill issue that Bernstein views as finite. Ferguson is cast as a distribution leader with exposure to a sizable data center build cycle and associated structural tailwinds in cooling technology. Cintas is portrayed as a proven compounder facing regulatory uncertainty tied to a material acquisition.
Investors assessing the sector should weigh durable pricing power and recurring revenue against premium valuation levels and deal-specific or regulatory risks. The firm’s ratings reflect these trade-offs: two Outperform recommendations and one Market-Perform.