Wedbush Securities Reports Casella Waste System's Q3FY11 Disappoints Due to Impact of Operational Challenges, Divestitures, And Weather

In a report published by Wedbush Securities, Casella Waste Systems's CWST Q3FY11 disappoints due to the impact of operational challenges, divestitures and weather. Wedbush Securities reported that it maintained the Outperform rating on Casella Waste Systems, despite weaker-than-expected Q3:FY11 operational performance & lowered FY11 outlook. “While our estimates and rating are under review, we are currently maintaining our positive stance on shares of Casella Waste following the company's disappointing Q3:FY11 results and lowered FY11 guidance. Management attributed the weaker-than-expected operating results to (i) operational challenges as the company's landfills reached annual permit levels in early December, (ii) the impact from the divestiture of the non-integrated Fairfield County Recycling (FCR) assets announced in late January, and (iii) adverse weather conditions during the quarter. Despite the miss on Q3:FY11 results, we remain encouraged by the company's operational and strategic outlook given (i) the earlier-than-expected completion of the asset divestiture, (ii) the announced acquisition of the McKean County, Pennsylvania, landfill for $4.7 million ($0.5 million in cash), and (iii) continued progress on deleveraging the balance sheet. Accordingly, we are reaffirming our OUTPERFORM rating on CWST, although shares are likely to open relatively unchanged ahead of the company's earnings conference call tomorrow. For long-term investors, we would look for any near-term weakness as a buying opportunity.” Casella Waste Systems closed yesterday at $7.08.