Darling Ingredients' (DAR) robust operational execution, improving renewable fuel economics and recovering waste oil markets are collectively creating a supportive earnings environment, UBS said in a Tuesday note.

The analysts said the tailwinds are likely to sustain into H2 and beyond, and are expected to drive higher free cash flow and continued strength in EBITDA.

Given compelling FCF generation and a material decline in leverage driven by meaningful improvement in the balance sheet on robust earnings performance, the company could accelerate share repurchases in 2027, according to the note.

Considering higher renewable volume obligations and regulatory clarity around small refinery exemptions, UBS said the current renewable diesel margin environment is more sustainable than previously expected.

UBS reiterated its buy rating on the stock and boosted its price target to $88 from $78.

Price: 62.39, Change: -0.87, Percent Change: -1.38