Oppenheimer Remains Bullish on Covanta Holding (CVA) Following Recent Trade Off
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Oppenheimer reiterated an Outperform rating and $20.00 price target on Covanta Holding (NYSE: CVA) as shares see a recent trade off. Oppenheimer continues to see upside to CVA’s FY16 metals revenue outlook of $50-60M given YTD trends in scrap steel pricing.
Analyst Noah Kaye commented, "CVA shares are off 10% QTD (vs. S&P 500 3.1% gain) and trading in the lower half of the 52-week range despite CVA reaffirming FY16 guidance in August and a largely unchanged commodity outlook. With CVA’s dividend yield now close to 7% and 2017 shaping up as a flattish year for EBITDA and a down year for FCF, we see it as increasingly likely CVA will keep the dividend at current levels in December. However, as we introduce our 2018 estimates, we expect EBITDA and cash generation from the Dublin project, Manhattan MTS and other initiatives to decrease leverage and provide cushion for a 2018 dividend increase. We see shares as an attractive yield play on the recent pullback and reiterate our Outperform rating."
Shares of Covanta closed at $14.81 yesterday.
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