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Casella Waste shares tumble on lower guidance cut

NEW YORK (AP) -- Shares of Casella Waste Systems Inc. fell to their lowest price in more than two years Tuesday, after the company posted a larger-than-expected loss in its fiscal second-quarter and cut its full-year revenue guidance.

THE SPARK: For the quarter ended Oct. 31, the company posted an adjusted loss of $5.7 million, or 18 cents per share. Revenue fell 7 percent to $120.3 million.

Analysts polled by FactSet expected a loss of 8 cents per share and revenue of $125.4 million.

For the full year Casella expects revenue of $468 million to $478 million, down from a previous forecast of $475 million to $485 million. Analysts expected $482.1 million.

THE BIG PICTURE: The Rutland, Vt., company provides garbage-disposal and recycling services in the Northeast. It blamed the full-year guidance cut on lower-than-expected recycling commodity prices and landfill volumes, along with project and contract delays.

Also late Monday, Casella said that it completed the sale of property containing its Maine Energy Recovery facility to the city of Biddeford, Maine, for $6.7 million over a period of 21 years. The city also will enter into new 10-year waste handling and recycling collection agreements with the company.

Casella announced the departure of Paul Larkin, its president and chief operating officer. It named Ed Johnson, the company's current chief financial officer, to replace Larkin. Casella also named Ned Coletta, its vice president of finance and investor relations, as senior vice president, CFO and treasurer.

THE ANALYSIS: Wunderlich Securities analyst Michael Hoffman called the second-quarter results "just plain ugly," but backed his "Buy" rating and $8.50 price target for Casella shares.

Hoffman said that the company could potentially get a boost from the early closing of the Maine property sale, higher paper prices and an increase in trash volume from Superstorm Sandy. He added that the management changes are "welcome" and noted that Johnson is well respected.

THE SHARES: Down 23 cents, or 5.2 percent, to $4.08 in afternoon trading, after dropping to $3.76 earlier in the session, marking the lowest price since the summer of 2010.