Arch Coal sinks after Morgan Stanley downgrades on cheaper coal


Arch Coal (ACI -5.6%) is downgraded to Underweight from Equal Weight at Morgan Stanley, which expects even cheaper natural gas will knock down coal prices and ACI’s profits.

ACI is a thermal-heavy name with significant balance sheet leverage, making it vulnerable to prolonged depressed market conditions, the firm says.

Exelon (EXC -2.7%), which the firm also downgraded, is taking a hit; Consol Energy, which is also exposed to east coast coal is down too.

The firm sees two utilities benefiting from current trends; Calpine (CPN +0.8%) and Dominion Resources (D +2%), although the advantage may already be priced into D’s shares.

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Comments (7)
  • Hendershott
    , contributor
    Comments (1834) | Send Message
     
    Even cheaper natural gas?
    16 Oct 2013, 03:49 PM Reply Like
  • nemonemo
    , contributor
    Comments (339) | Send Message
     
    MS just woke up after upgrading ACI at $22. What a scammer. Downgrade at bottom.
    16 Oct 2013, 04:49 PM Reply Like
  • CAIKEN1
    , contributor
    Comments (157) | Send Message
     
    Morgan Stanley is just manipulating the market. Don't worry, EXC will come back with a vengeance and it will, once again, make the annalists look as useless as they really are.
    16 Oct 2013, 05:02 PM Reply Like
  • rocknrollstew
    , contributor
    Comments (118) | Send Message
     
    ms price target $2 gs $3...? come on aci is not jrcc..both are maipulating..lets see what btu posts in the am
    16 Oct 2013, 07:02 PM Reply Like
  • rocknrollstew
    , contributor
    Comments (118) | Send Message
     
    aci is looking at europe paying 4x what we pay for ng..theyre sick of dealing with russians for ng..switching back to coal from what ive read..lets see
    16 Oct 2013, 07:00 PM Reply Like
  • deercreekvols
    , contributor
    Comments (9725) | Send Message
     
    http://seekingalpha.co...

     

    The "expert" at Morgan Stanley should have waited a day to see what would happen with Peabody. Entire coal industry is up on the news. This downgrade call was good for about 12 hours. Nice job over there at Morgan Stanley. Take yourselves to lunch and try to predict the future.

     

    Fools.
    17 Oct 2013, 09:03 AM Reply Like
  • CAIKEN1
    , contributor
    Comments (157) | Send Message
     
    Stay cool. Although I am not totally impressed with the credentials of the leadership, I have learned that "balls and patience" pays off. I am confident (short of a reactor melt down) that EXC is a safe company. These downgrades are harsh and arguably inappropriate. We may stress for another day or two but I believe the bottom is near. Do your thing but my advice is to hold on! WTF, its only money and God owns it all!
    24 Oct 2013, 05:53 PM Reply Like
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