J.P Morgan: EnergySolutions Report Solid Quarter

J.P Morgan is raising EBITDA estimates on EnergySolutions ES to account for the early-stage impact of Zion, but are lowering EPS to reflect higher interest expense following a recent refinancing. ES cited increased disposal volumes from Federal jobs, a trend that should be sustainable, as stimulus-funded cleanup work should continue through 2011. Commercial trends remain sluggish but stable, though the gradual acceleration ofZion should enhance the outlook over the next few years. Reported EBITDA of $32.4mm was slightly above our estimate, driven by modest upside from revenue and margins, as growth appears to be gently accelerating across most lines of business. Excluding the refinancing charge, interest expense was only $1mm above our forecast. Operating cash flow was very strong versus JPM's expectation. J.P Morgan as Neutral rating and $5.50 PT on ES ES closed Wednesday at $4.92