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Cloud Peak upgraded at FBR; Peabody’s emergence may boost coal valuations

Mar. 23, 2017 10:37 AM ETCloud Peak Energy Inc. (CLD) StockBTU, ARCH, KOL, CLDPQBy: Carl Surran, SA News Editor9 Comments
  • Cloud Peak Energy (CLD +2%) is upgraded to Market Perform from Underperform with a $4 price target at FBR, which says the stock's valuation is fair compared to its outlook for the timing and extent of a potential recovery.
  • The firm says CLD management has done a fine job repositioning the company, from restructuring its export obligations to addressing the bonding questions to issuing equity and redeeming debt; however, CLD's exposure to volatile seaborne pricing remains a key uncertainty.
  • FBR also thinks Peabody Energy’s (BTUUQ) emergence from bankruptcy is bullish for the broader coal sector (NYSEARCA:KOL), as the move could attract more liquidity and long-term capital to the industry, which remains in gradual cyclical recovery even as long-term pressures remain.
  • Arch Coal (ARCH -2.1%) is FBR's top stock in the group, given its exposure to both met and thermal prices and its low-cost production profile.

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