Walter Energy cut to Sell, Arch Coal raised to Neutral at Goldman Sachs

|About: Walter Energy, Inc. (WLT)|By:, SA News Editor

Walter Energy (WLT) -3.4% premarket after Goldman Sachs downgrades shares to Sell from neutral with a $5 price target, down from $9, citing a more negative view of met coal pricing and more positive thermal price forecast.

Three factors underpin the Sell rating: the firm's EBITDA estimates are 59% and 35% below consensus for 2014 and 2015 given its met price view; it believes WLT's $250M asset sale goal will be difficult to achieve; and at current met prices, WLT may face a potential liquidity challenge in two years given negative free cash flow.

Goldman raises its rating on Arch Coal (ACI) to Neutral from Sell to reflect its more constructive thermal coal price outlook.