Consol near three-year high as Goldman highlights Marcellus prospects

|By:, SA News Editor

Consol Energy (CNX) shares rose to a nearly three-year high before pulling back, after Goldman Sachs raised its rating to Buy and cited CNX's strong free cash flow and growing position in the Marcellus fields.

Goldman said CNX trades at a deep discount to its sum-of-the-parts value, and points to four pillars to its positive view: improving free cash flow in the coal segment, a major E&P production ramp, potential for asset sales and restructuring, and a strong balance sheet.

Investors also are optimistic that CNX can weather the EPA's proposed cuts in carbon emissions at U.S. power plants; Sterne Agee thinks CNX is perhaps the best-positioned coal miner to meet the new requirements, "given its low-cost energy production and excess asset value."

As Goldman praised CNX, it downgraded Peabody Energy (BTU -1.4%) and cut price targets for Alpha Natural Resources (ANR +0.7%), Arch Coal (ACI +3.8%)and Walter Energy (WLT +1.2%).