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Wedbush Downgrades Casella Waste Systems (CWST) to Neutral

August 29, 2014 7:14 AM EDT
Get Alerts CWST Hot Sheet
Price: $96.46 +0.41%

Rating Summary:
    10 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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Wedbush downgraded Casella Waste Systems (NASDAQ: CWST) from Outperform to Neutral with a price target of $5.00 (from $6.00). Analyst Al Kaschalk is cautious given recent performance.

"While management may have valid reasons for why the business continues to struggle, they are not delivering results that are consistent with their expectations and as a result, we are raising the caution flag," said Kaschalk.

"The rationale for our downgrade of the shares includes: (i) anemic incremental operating profit flow through despite increasing landfill volumes by over 400,000 tons in the past year; (ii) pricing growth remaining below cost inflation especially within Collection and Disposal service lines; and (iii) delays with driving returns to optimal levels given the complexity of service offering and lack of pricing capacity within Customer Solutions. In addition, we don’t expect CWST to benefit from lower borrowing costs as management re-financed its credit facility over the next six months. While shares could be viewed as attractive under certain take-out scenarios, until there is more tangible evidence of an improvement in operating results and stronger business fundamentals, we recommend investors move to the sideline ahead of early 2015 refinancing of the company’s credit facility," he added.

For an analyst ratings summary and ratings history on Casella Waste Systems click here. For more ratings news on Casella Waste Systems click here.

Shares of Casella Waste Systems closed at $4.50 yesterday.



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