Analyst Note: Covanta Holding Downgraded

NEW YORK (AP) — An analyst on Friday downgraded shares of Covanta Holding Corp., saying the company, which converts waste to energy, will not do as well in an economic recovery as it has during the recession.

Gregg Orrill of Barclays cut his rating on the stock of the Fairfield, N.J., company to "Equal Weight" from "Overweight."

Covanta's "heavily contracted business model that was appealing during a recession has substantially less leverage to an economic recovery and we also see a less appealing risk/reward from here following the stock's recovery from the bottom," he wrote in a client note.

Orrill noted that the shares have gained a relatively modest 15 percent since April 1.

In addition, declining power prices could lessen demand for Covanta's services, he said.

In morning trading, shares fell 21 cents to $18.65, near the analyst's $20 price target.