Stifel Upgrades Progressive Waste Solutions Ltd

Stifel upgraded Progressive Waste Solutions Ltd (USA) BIN to Buy and Tuesday with a $37 price target.

Analysts Michael Hoffman and Brian Butler noted that in “early November we traveled with CEO Joe Quarin to visit institutional investors.

“We realized that BIN would truly reduce its long-term capital spending to a 9 percent to 10 percent range including reasonable growth and that efforts to repair the margins in Canada and more importantly in the US-North can and should occur in a timely manner.

“The latter being buoyed by, but not dependent on the sale of Long Island which could be announced by year-end. We think of BIN as having great assets in Canada, well positioned in the US-South and in transition in the US-North.”

The analyst report commented that Cash Flow From Operations (CFFO) “matters and it is clearly a focus since it is a reflection of the income statement productivity gains. However, the single biggest lever to
FCF is capital spending.

“BIN needs to bring total capital spending down to a 10 percent level with about 8.5 percent for maintenance and 1.5 percent for growth. This has been a company that liked to spend money. We now believe a real behavior change is underway. We estimate FCF could be 11.5 percent to 12 percent of sales in 2015.”

Progressive Waste Solutions Ltd (USA) closed at $30.57 Monday, up 1.02 percent.