Wunderlich Maintains Buy After County Vote On New Contract With Covanta

Wunderlich Securities has published a research report on Covanta Holding Corporation CVA after Fairfax County's Board of Supervisors in Virginia voted on a new disposal contract with the company. In the report, Wunderlich writes, "On March 29, the Fairfax County, VA, Board of Supervisors (BOS) voted to approve a new 30-year disposal contract with CVA. The county will not exercise its option to purchase the waste-to-energy (WTE) facility for $417.5mm, or roughly 13.9 times EBITDA. While we believe the sale of the facility would have had a bigger near-term impact (due to the rapid monetization of the NOL) on CVA share price, the new agreement provides 30 years of stable cash flow. In addition, it helps smooth the $15mm hit to EBITDA following the county's cessation of debt service payments." Wunderlich maintains its Buy rating and $21 price target. Covanta Holding Corporation closed yesterday at $16.75.