Oppenheimer Sticks to Their Buy Rating for Covanta Holding

By Austin Angelo

In a report released today, Noah Kaye from Oppenheimer reiterated a Buy rating on Covanta Holding (NYSE: CVA), with a price target of $20. The company’s shares closed yesterday at $14.20.

Kaye wrote:

“CVA’s leverage, capital structure and dividend trajectory have recently garnered increased focus from investors, as leverage rose to 6.9x net debt to TTM adj. EBITDA in 1Q17 ahead of the Dublin waste-to-energy facility start-up. After assessing multiple operational risks, including the Dublin ramp, energy/metals commodity exposure and operating cost inflation, we remain constructive on shares. As we introduce FY19-20 estimates, we believe EBITDA/FCF growth should support long-term increase to dividends (though it may be premature to assume an increase for 2018). We believe organic growth represents the best path forward on deleveraging and forecast leverage to decline to 5.2x by FY20.”

According to TipRanks.com, Kaye is a 3-star analyst with an average return of 4.1% and a 57.3% success rate. Kaye covers the Industrial Goods sector, focusing on stocks such as Rockwell Automation Inc, Waste Connections Inc, and Republic Services.

Covanta Holding has an analyst consensus of Moderate Buy, with a price target consensus of $17.50.

Based on Covanta Holding’s latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $404 million and GAAP net loss of $52 million. In comparison, last year the company earned revenue of $403 million and had a GAAP net loss of $37 million.

Based on the recent corporate insider activity of 32 insiders, corporate insider sentiment is negative on the stock. Last month, Ronald Broglio, a Director at CVA sold 3,000 shares for a total of $42,960.

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Covanta Holding Corp. engages in the operation and ownership of infrastructure for the conversion of waste to energy, and related waste transport and disposal and other renewable energy production businesses. It operates large-scale Energy-from-Waste and renewable energy projects. Its energy-from-waste serves two markets as both a sustainable waste disposal solution that is environmentally superior to landfilling and as a source of clean energy that reduces overall greenhouse gas emissions and is also considered renewable under the laws of many states and under federal law. The company was founded on April 16, 1992 and is headquartered in Morristown, NJ.