Waste stocks downgraded by Stifel, seeing recycling headwinds

|About: Advanced Disposal Services,... (ADSW)|By:, SA News Editor

Waste Management (NYSE:WM) -1.8% pre-market after Stifel downgrades the stock - as well as peers Waste Connections (NYSE:WCN), Advanced Disposal Services (NYSE:ADSW) and Republic Services (NYSE:RSG) - to Hold from Buy, saying the recycling business has deteriorated more than expected.

YTD recycled paper prices are down $34/ton from the FY 2018 average, and paper accounts for 60%-70% of the recycling basket for most companies, which translates into ~$20/ton of headwind, Stifel analyst Michael Hoffman says.

The demand is there, but new low contamination restrictions in other importing countries such as Vietnam, India and Indonesia are disrupting the flow of goods, and paper prices are falling again, Hoffman says.

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