What A Waste: Advanced Disposal Services Likely Hit Hard By Hurricanes

One man’s trash stock is... another man’s trash.

This year’s devastating hurricane season turned a lot of goods into a lot of garbage, but the mounting heaps of personal belongings and infrastructure debris in Texas, Florida and other storm-struck states didn’t merit enthusiasm on the rubbish route.

Stifel Nicolaus downgraded Advanced Disposal Services Inc ADSW, which collects and transfers waste and operates national recycling facilities and landfills, to a Hold with a $26 price target.

Research analysts expect Hurricane Irma’s short-term disruption to Florida business, resulting loss of productivity and eventual call for overtime costs to cut third-quarter earnings per share by a penny.

“Its landfill position in Florida is modest and therefore any offsetting benefit is assumed to be muted,” Stifel’s Michael Hoffman and Brian Butler wrote in a Wednesday note. “However, we assume ADSW will seek to isolate these costs so the strength of the overall solid waste market coupled with its normal 3Q seasonality can be clearly profiled.”

The firm is well positioned to organically decrease its leverage ratio by an annual 30 to 50 basis points, Hoffman and Butler noted.

The Street has a total of four Buy ratings and three Holds on the stock, which traded at $25.55 at time of publication.

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