Heritage-Crystal Clean Initiated

Heritage-Crystal Clean (HCCI - Snapshot Report) is a leading industrial and hazardous waste services provider to the vehicle maintenance and manufacturing industries. We think Heritage's programs are attractive to small and medium-sized businesses seeking hazardous waste management and a minimal regulatory burden.

Over the next few years, we expect double-digit earnings growth due to market share gains in automotive repair, growth in customer commitments to the nonhazardous solvent recycling system, and the continued branch rollout.

We are initiating coverage of HCCI shares with a Hold rating. Our target price is $14.00, or 25.5x our FY09 EPS estimate. Heritage-Crystal Clean shares are trading at 124x our FY08 EPS and 21x our FY09 EPS. The higher P/E multiple in 2008 reflects a lower earnings stream related to the costs incurred on going public.

Read the full analyst report on HCCI