Mar. 26, 2014, 10:58 AM
- UBS is the latest firm to turn negative on coal, expecting the seaborne met coal market to remain in oversupply and seeing risk to Wall Street expectations.
- Given the view of challenging met coal fundamentals and fair valuation, UBS downgrades Arch Coal (ACI -2.1%), Alpha Natural (ANR -0.2%), Peabody Energy (BTU -2.9%), Consol Energy (CNX -2.2%) and Walter Energy (WLT -4.9%) to Neutral from Buy.
- Stock target prices are cut across the board: ACI to $5 from $7, ANR to $5 from $12, BTU to $17, CNX to $42 from $48, WLT to $8 from $25.
- Cloud Peak Energy (CLD -0.5%) retains a Buy rating given a potential run in natural gas prices.
- BofA/Merrill and Jefferies have come out negative on coal in recent days.
Mar. 25, 2014, 2:38 PM
- Believing managements are too seldom congratulated for the deals they didn’t make, Jefferies offers praise to Consol Energy (CNX +1.1%) for resisting calls for years to acquire "cheap" coal producers, while downgrading Alpha Natural Resources (ANR -3.4%) for spending $7.7B three years ago for low-quality Massey Energy.
- The firm dredges up ANR's woes "not to rub salt in wounds," but because investors new to the coal sector see ANR’s chart down 90%-plus and assume it is due to the cyclical and secular headwinds of cheap gas and pending environmental rules; the very expensive acquisition of low quality assets explains much of the sector's decline.
- Meanwhile, CNX is the firm's favorite risk/reward investment in the sector and can do more in the long-term through its MLP structure to unlock value.
Mar. 25, 2014, 8:33 AM
- Arch Coal (ACI) -4.1% premarket as it and Alpha Natural Resources (ANR) are downgraded to Hold from Buy at Jefferies, which says sluggish met coal prices and the threat of another bust in gas prices are too much to merit continued recommendation of high levered ACI and ANR.
- For ACI, the firm cuts its FY 2014 EPS to a loss of $0.80 from a $0.60 loss, and lowers its stock target price to $4.75 from $8.
Mar. 21, 2014, 10:35 AM
- Walter Energy (WLT +6.2%) bounces from yesterday's plunge, with Morgan Stanley's Evan Kurtz saying Wednesday's debt offering gives the company sufficient liquidity to make it into 2017 even if the price of met coal doesn't recover.
- The met coal weakness - with spot prices below cash costs of 89% of global seaborne producers - is unsustainable in the view of his team, but nevertheless, it's altered its bear case to a world where prices never again rise above $160 per ton. In this instance, the PT on WLT would be $2.
- Others bouncing today: Arch Coal (ACI +2.6%), Alpha Natural Resources (ANR +2.4%), Peabody Energy (BTU +1.1%), Consol Energy (CNX +0.9%).
- KOL +2.5%
Mar. 20, 2014, 9:12 AM
Mar. 20, 2014, 8:15 AM
- Walter Energy (WLT) -11.4% premarket as BofA/Merrill comes out deeply negative on the coal sector (KOL), expecting depressed fundamentals over the next several years due to oversupply and reluctance to shut capacity.
- On WLT, the firm fears the company is likely to face liquidity issues and cuts its price target on the shares to $2 from $8 "even assuming what we believe to be a best-case cost scenario."
- ACI -2.5%, BTU -2.3%, ANR -1.5% premarket.
Mar. 7, 2014, 12:39 PM
- Alpha Natural Resources (ANR -9.4%) is hit hard after Goldman Sachs last night cut its rating on the shares to Sell and lowered its price estimates for coal; other sector names are following suit.
- Goldman also cut its price estimate for met coal this year to $141/metric ton from $150 and lowered projections for next year and 2016 following increased Australian output, an expected slowdown in the growth of Chinese imports, and “limited U.S. supply rationalization."
- The firm maintains a Neutral rating on Walter Energy (WLT -5.6%) but cuts its price target to $10 from $12.
- Also: BTU -4.2%, ACI -4%, CNX -1.5%, OXF -1.6%, JRCC -1.5%, CLD -0.7%, KOL -2.1%.
Mar. 6, 2014, 6:11 PM
- Alpha Natural Resources (ANR) -2.4% AH after Goldman Sachs downgrades shares to Sell from Neutral with a $4 price target, down from $6.
- Goldman cites a challenging met coal price outlook which drives its EBITDA estimates sharply below consensus; valuations near historical peak levels on an EV/EBITDA basis; competitively disadvantaged assets, including higher-cost met coal assets and lower-quality PRB mines; and high leverage levels and an incrementally negative free cash flow forecast.
- The firm says estimates need to be recalibrated lower before it could become more constructive on the stock.
Mar. 5, 2014, 2:41 PM
- Alpha Natural Resources (ANR -1.1%) will pay a $27.5M fine - the largest fine ever for violations of water pollution permits - and spend $200M to reduce illegal toxic discharges into hundreds of waterways across five Appalachian states, according to a proposed settlement.
- The government says that during 2006-13, ANR and its subsidiaries violated water pollution limits in state-issued permits more than 6,000 times, and discharged heavy metals and other contaminants from nearly 800 outfall pipes directly into waterways.
- Under the settlement, the mine operators will install wastewater treatment systems and take other measures aimed at reducing discharges from 79 active coal mines and 25 coal processing plants.
Feb. 12, 2014, 8:42 AM
- Alpha Natural Resources (ANR) posted a wider Q4 earnings loss but came in ahead of analyst estimates, sending shares +2.6% premarket.
- Q4 sales of coal fell to 20.6M tons from 25.9M in the year-ago quarter, with the weighted average margin per ton falling to $4.57 from $17.45.
- Recent bouts of very cold weather have increased demand for thermal coal and set “firmer" prices, but the market for metallurgical coal used in steelmaking continues to be “very challenging.”
- ANR says it is changing its 2014 shipments guidance for eastern met and eastern steam coals primarily in response to weak pricing for low-quality met coals, which are selling below thermal prices; now expects to ship 77M-90M tons.
- Capex guidance for 2014 is reduced to $250M-$300M to align levels of capital investment with the updated outlook for shipment levels.
Feb. 12, 2014, 7:03 AM| 2 Comments
Feb. 12, 2014, 12:05 AM
Feb. 11, 2014, 5:30 PM
Feb. 4, 2014, 12:48 PM
- Arch Coal (ACI +2%) shares turn green after management makes positive comments about the thermal coal market during this morning's earnings call.
- ACI reported a larger than expected Q4 loss, but expects U.S. thermal coal markets to tighten further this year, as several factors including favorable weather trends, healthier economic activity and elevated natural gas prices should ensure that the prices of most U.S. thermal coal is competitive.
- The same can't be said for metallurgical coal, as overseas markets remain weak, ACI says, but production of higher cost met coal would ease and cause markets to tighten in the future.
- Other coal miners also are higher: CLD +3.9%, WLT +3.7%, WLB +3.4%, ANR +2.6%, RNO +2.1%, CNX +1.5%, BTU +0.2%.
Feb. 3, 2014, 5:39 PM
- James River Coal (JRCC) -6.7% AH after plunging nearly 20% in the final half-hour of regular trading on a Bloomberg report that it hired Perella Weinberg Partners to advise on the restructuring of its debt and restructuring advisers including Blackstone have been pitching creditors.
- JRCC, which has closed mines and hasn’t posted an annual net profit since 2010, is among U.S. producers hurt by a decline in coal prices and the natural gas boom; for metallurgical coal used in steelmaking, rising Australian output has helped create a global surplus.
- Other coal producers also fell sharply today: ANR -8.1%, WLT -7.1%, ACI -5.4%, OXF -3.1%, BTU -2.7%, RNO -1.4%, CNX -1.2%.
Jan. 27, 2014, 2:31 PM
- The price for met coal used to make steel has dropped to $125/ton from an already-low $132/ton, and Citigroup’s Brian Yu thinks Alpha Natural Resources (ANR) and Walter Energy (WLT) stand to get hurt most among coal producers while Alliance Resource Partners (ARLP) and Peabody Energy (BTU) can best withstand the slide.
- Citi retains its Sell rating on ANR because of several marginal mines that risk closure in a low commodity price environment and from over-aggressive consensus estimates; the firm cuts its WLT 12-month target price to $14 from $17.50 given the multiple compression impact from met pricing.
- Meanwhile, Nomura prefers Consol Energy (CNX) and raises its 2014 EPS estimate to account for high gas production growth and upside from improved unit costs and gas price upside.
ANR vs. ETF Alternatives
Alpha Natural Resources Inc along with its subsidiaries is engaged in extracting, processing and marketing steam and metallurgical coal from surface and deep mines, and sells it to electric utilities, steel and coke producers, and industrial customers.
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