UPDATE: Stifel Initiates Coverage on Covanta with Hold Rating on Muted Outlook

In a report published Friday, Stifel analyst Jeffrey Osborne initiated coverage on Covanta Holding Corporation CVA with a Hold rating. In the report, Stifel noted, “We are initiating coverage of Covanta Holding Corporation with a Hold rating on the shares. Covanta is the leading Energy from Waste (EfW) company in North America. We appreciate the free cash flow generation (7.1% yield on 2014 FCF estimates), likely continued dividend increases, and GDP linked growth in waste pricing; however, we see this as all fully baked into the current valuation with the stock trading 9.1x EV/EBITDA on 2014 estimates. We look to get more constructive on the stock, all else equal, when we see evidence of EBITDA growth accelerating and new growth opportunities starting to play out. We see the management team as excellent operators owning plants with long-term contracts and great cash flow visibility; however, recent initiatives in the United Kingdom haven't worked out, and organic growth has been muted given lower energy prices in the Northeast coupled with a low priced market for waste collection.” Covanta Holding Corporation closed on Thursday at $21.11.