Market Overview

Stifel Tosses Casella Waste On Labor, Site Headwinds

Stifel Tosses Casella Waste On Labor, Site Headwinds

Casella Waste Systems Inc. (NASDAQ: CWST) missed bottom-line estimates last week and suffered a 6-percent plunge in share price. The stock recovered its losses and then some, but one Wall Street firm tossed the trash company to the side.

The Rating

Stifel Nicolaus analyst Michael Hoffman downgraded Casella from Buy to Hold and raised the price target from $28 to $30.

The Thesis

By Stifel’s analysis, Casella is on pace to beat its 2021 free cash flow goal by at least a year. Although challenged by labor and competitive industry wages, the company could drive growth through multiple permit expansions, Hoffman said in the downgrade note. (See the analyst's track record here.) 

“Like its peers, solid waste is very good and for CWST it is benefiting from tight disposal capacity, which is driving good collection and disposal price leverage,” the analyst said. “Even the organics and customer solutions segments are producing good sales growth and margins.”

Given robust sales growth through the second quarter on slightly decreased margins, Stifel raised its 2018 sales forecast from $632 million to $640 million and marginally increased its estimates for free cash flow and adjusted earnings before interest, tax, depreciation and amortization.

The recycling business is seen to suffer $3-million to $4-million EBITDA pressure as the specialist fee offsets rising costs and lower commodity prices, Hoffman said. Yet many of Casella’s legacy third-party tip fee agreements will expire next year, at which time, with level commodity prices, recycling could become a tailwind, he said. 

In 2019, the closure of Casella’s Southbridge site is seen to create a $6-million EBITDA headwind.

Price Action

Casella shares were slipping 2.89 pecent to $27.55 at the time of publication Monday. 

Related Links:

Why Efforts To Curb Plastic Use Could Affect Your Oil Trade

Dow Chemical CEO Says Company Is Tackling Plastic Waste

Latest Ratings for CWST

Nov 2019Initiates Coverage OnBuy
Aug 2019ReiteratesStrong Buy
May 2019MaintainsNeutral

View More Analyst Ratings for CWST
View the Latest Analyst Ratings

Posted-In: Michael Hoffman Stifel NicolausAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (CWST)

View Comments and Join the Discussion!

Latest Ratings

INFYBank of AmericaUpgrades
BRMKPrescience PointInitiates Coverage On15.3
DENNSunTrust Robinson HumphreyInitiates Coverage On21.0
DINSunTrust Robinson HumphreyInitiates Coverage On111.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Trading What You Know: Finding Your Diversification Center

Rising Transportation Costs, Brazil Trucking Strike Put Pressure On Kellogg's Profit Margins