UPDATE: Bank of America Downgrades Covanta to Neutral, Lowers PT to $15
Bank of America lowers its rating on Covanta (NYSE: CVA) to Neutral from Buy and cuts its price target by $3 to $15 on lower power prices.
Bank of America says, "More than one-third of Covanta's annual energy generation is exposed to market conditions. Due to the precipitous slide in natural gas prices, we are reducing estimates and expect guidance could come down when earnings are announced, scheduled for Feb 8. Our revised estimates now reflect open market electricity sales in the mid-to-low $30s/MWh, roughly a 20% decline from 4Q day-ahead rates in PJM. We also see soft pricing causing another decline in biomass utilization and possibly plant suspensions. Our EBITDA estimate for 2012 goes from $499M to $475M and for 2013E from $512M to $488M."
CVA closed at $14.08 per share on Wednesday.
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