Wunderlich Reiterates Buy On Covanta Holding Corporation

Wunderlich Securities is reiterating its Buy rating and $21 price target on shares of Covanta Holding Corporation CVA. In a note to clients, Wunderlich Securities writes, "We reiterate our Buy rating and $21 target on Covanta (CVA) shares. Seasonal 1Q11 maintenance and weather disruptions resulted in electricity revenues declining 1.1% YOY. In 2Q11, the business moves into a seasonally stronger period and CVA should benefit from higher PJM spot rates, up 12.3% with a quarterly average of $57.63. We forecast 2Q11 adjusted EBITDA of $120mm with margins of 29.6%, flat to slightly higher than 2Q10 after adjusting for the sale of the Asia IPP assets. Look for the 2Q11 investor focus to remain on the share repurchase program and growth. With a FCF yield of nearly 12%, the shares of CVA make for a compelling investment, in our view." Shares of CVA closed at $16.78 yesterday.