Onterris: 2Q26 Review: Lowering Dec 26 PT to $16

Research evidence excerpt

J P M O R G A N

North America Equity Research

06 August 2026

Onterris

Neutral

ONT, ONT US

Price (05 Aug 26):$22.63

2Q26 Review: Lowering Dec 26 PT to $16

▼Price Target (Dec-26):$16.00

Prior (Dec-26):$22.00

ONT reported a ~3% adj. EBITDA miss in 2Q ($31.9MM vs. consensus

$33.0MM), driven by a top-line decline of ~20% YoY to $186.7MM vs.

consensus $201.0MM. Total company adj. EBITDA margin was 17.1%, up

~20bps YoY. The company posted 2Q diluted adj. EPS of $0.51 vs. consensus

$0.37. During the quarter, Consulting and Treatment (previously reported as two

separate segments named Assessment, Permitting and Response and Remediation

and Reuse) revenues declined ~27% YoY to $125.6MM with an adj. EBITDA

margin of 22.2%, up ~32bps YoY. Measurement and Analysis revenues declined

~3% YoY to $61.1MM with an adj. EBITDA margin of 26.2%, down ~297bps

YoY. Management lowered full year guidance, as revenue outlook was reduced

(previously noted as 2H weighted), primarily due to lower pass through revenue

and historically low Environmental Emergency Response revenue, see details

below. The board announced a comprehensive strategic review of the company's

business, portfolio, capital allocation, and strategic alternatives, along with

adopting a limited duration stockholder rights plan in response to significant and

undisclosed accumulation of ONT shares and derivative securities. Following the

2Q miss and guidance cut, we are lowering estimates with FY26 and FY27

EBITDA of $117.3MM and $117.2MM, respectively. Our Dec 26 PT is now $16

(from $22) based on ~7.5x FY1 EV/EBITDA, roughly in line with the current

valuation. We rate ONT Neutral. Below are key highlights from the earnings

conference call.

Management lowered FY26 guidance, projecting consolidated adj. EBITDA

at $117MM-$120MM (mp $118.5MM vs. prior $125MM-$130MM at mp

$127.5MM). Overall revenue expectations for FY26 reduced to $740MM$790MM (mp $765MM vs. prior $840MM-$900MM at mp $870MM),

representing down ~8% YoY at mp. Environmental Emergency Response

revenue now expected at $5MM–$35MM (mp $20MM vs. prior $60MM and

$77MM in 2025), below the long term guidance of $50MM-$70MM. This

implies consolidated adj.…