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


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.

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Comments (4)
  • 6151621
    , contributor
    Comments (1172) | Send Message
     
    And what about ANR? Goldman can move markets but other than that they don't really have a crystal ball.
    21 Apr 2014, 09:16 AM Reply Like
  • papayamon
    , contributor
    Comments (1293) | Send Message
     
    Tsk. WLT keeps losing friends. At this rate, they will have no friends at all in another quarter. This stock will wither, but it will explode on the least bit of upside news. That makes it an unattractive stock to trade at the moment.
    21 Apr 2014, 09:22 AM Reply Like
  • tiger8896
    , contributor
    Comments (719) | Send Message
     
    I would say the downgrade is warranted given their dependency on met coal. They cut some production recently but they need to sell assets and cut their debt more than shut down some production.

     

    Always a chance that met coal pricing picks up but if it stays at these depressed levels WLT will follow Patriot and JRCC into BK.
    21 Apr 2014, 10:18 AM Reply Like
  • benitus
    , contributor
    Comments (3208) | Send Message
     
    papa....I presume when you say WLT will explode on upside news, you meant the price will skyrocket. If that's the case, it's a good bet for trading because I've been making money each time it bumped up.
    21 Apr 2014, 10:35 AM Reply Like
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