Lower Paper Prices And Fuel Surcharges Prompt Downgrade On Waste Management

In a report published Friday, Stifel analyst Michael Hoffman downgraded the rating on Waste Management WM from Buy to Hold, and removed the $57.00 price target. In the report, Stifel noted, "We are lowering our rating on Waste Management, Inc. (WM, Hold, $52.70) from Buy to Hold. When factoring in FCF headwinds from lower paper prices, fuel surcharges, foreign currency and the sale of Wheelabrator (WTI) offset by the 2014 RIF, Deffenbaugh purchase, working capital savings and productivity initiatives our baseline FCF drops from $1.38B to $1.24B." The report continued, "The long-term FCF growth rate is revised slightly lower too, lowering the valuation from $57 to $53. We have to wonder with the recent plummet in paper prices did WM have to throw out its original 4Q14 script. Instead of a message about flat to up FCF now FCF is probably flat to down in 2015." Waste Management closed on Thursday at $52.70.