DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON
TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-U.S ANALYSTS. U.S. Disclosure:
Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this
report as only a single factor in making their investment decision.
03 May 2010
Clean Harbors (CLH)
Leading the Way
In the wake of the Deepwater Horizon tragedy, we would like to send our
sympathies to the families of the crew members and express our deepest
concerns for the environment of the Gulf Coast of the United States.
Upgrading to Outperform: We are upgrading shares of Clean Harbors to
Outperform from Neutral. Our upgrade is based on 1) volumes coming back in
the base business faster than expectations, and 2) higher field services revenue
driven by the oil spill that is not one-time in nature.
Volumes are going up in the base business. We believe volumes in the
more cyclical lines of business have rebounded based on channel checks.
Given the fixed cost nature of the business, that likely means significant
operating leverage. We estimate that 40% of the business is cyclical.
Hazardous waste generators can only delay keeping waste for only so long after
which they have an obligation to get rid of it.
Emergency clean-up is additional upside. We believe the market
underestimates the clean-up work Clean Harbors will get from the oil spill. This
is not one-time in nature, and given the magnitude of the disaster it will likely
result in an earnings stream for a couple of years rather than a one-time event.
To account for that, we are taking up our estimates for both revenue and
earnings on the field services division by 20% for 2010.
Valuation: We are raising our earnin