Tue, Mar. 17, 12:59 PM
- The outlook for U.S. coal producers is "increasingly bleak," and the sector is likely to undergo a wave of bankruptcies, Macquarie Research warns as it forecasts U.S. coal prices (NYSEARCA:KOL) will no longer move in conjunction with international coal prices.
- The decoupling, which will feature declines in U.S. coal prices, will be a "necessary step to force rationalization on U.S. producers" but also likely will result in production cuts and bankruptcies, says analyst Anthony Young.
- Peabody Energy (BTU +4.8%) recently had to pay a 10% interest rate on bonds it issued, which Young says bodes badly for other coal producers, making it harder to refinance debt and leading to cuts and liquidity squeezes.
- Macquarie lowers its stock price targets on Alpha Natural (ANR -4.2%) to $0.60 from $1.15, on Arch Coal (ACI -1.9%) to $0.90 from $1.25, on BTU to $5.30 from $6.40, and on Consol (CNX -0.1%) to $29.50 from $31.50.
Thu, Mar. 12, 9:14 AM
- Peabody Energy (NYSE:BTU) -1.5% and Consol Energy (NYSE:CNX) -1.7% premarket after BofA Merrill downgrades both stocks to Underperform from Neutral on a weaker coal outlook.
- BofA cites poor China fundamentals, reflected in high inventory levels at ports and lower recent thermal imports, in reducing its thermal coal outlook 12% to $57/metric ton in 2015 with a 28% drop to $52/ton in 2016, and cutting its met coke view 12% in 2015 to $110/ton and 18% in 2016 to $115/ton.
- In lowering BTU's stock price target to $5 from $7, the firm cuts its FY 2015 EPS estimate to a $1.40 loss from its earlier view of a $0.90 loss, and slashes its FY 2016 EPS estimate to a $0.90 loss from a loss of $0.05.
- BofA sees CNX as "the less bad option" for investors, but still lowers its price target to $26 from $33 as consensus earnings estimates for the company "needs to drop with the new market reality."
Tue, Mar. 10, 3:45 PM
- Peabody Energy (BTU -5.6%) slides sharply after Jefferies downgrades shares to Hold from Buy with a $6 price target, cut from $10, on continued concerns about domestic thermal coal fundamentals due to low natural gas prices, weakening exports, MATS related coal plant closures and increased renewable capacity.
- BTU's Australian coal business is more likely to improve in the near-term due to higher seaborne thermal coal prices, the firm says, but operating costs have not declined nearly as much as competitors due to its extensive hedging program.
- Jefferies is bearish on mining shares in the near-term, and the firm revised many of its commodity price forecasts lower, but it has placed four metals and mining stocks above the rest: Freeport McMoRan (FCX -3.5%), Rio Tinto (RIO -2.6%), First Quantum (OTCPK:FQVLF -6.8%) and Angofagasta (OTCPK:ANFGY -5.8%).
Thu, Feb. 26, 2:45 PM
- J.P. Morgan analysts see some encouraging signs for coal (NYSEARCA:KOL), which would be good news for companies such as Peabody Energy (BTU -5.7%), Cloud Peak Energy (CLD -5%), Alliance Resource Partners (ARLP +0.9%) and Foresight Energy (FELP -1.2%).
- Coal equities have bounced off lows, the JPM crew says, which meshes with its belief that the greater financial challenges faced by oil and gas E&Ps should reduce natural gas supply and help coal prices later this year and into 2016.
- JPM has Overweight ratings on the two MLP coal miners ARLP and FELP, which it expects to benefit as the gas market tightens in 2016 and with the added attraction of yield in a yield-starved world; BTU and CLD enjoy stronger balance sheets, which should see the companies through what could still be a sloppy coal market in 2015.
- Alpha Natural Resources (ANR -6.9%) and Arch Coal (ACI -4.3%), however, acquired so much debt that their equity effectively has become primarily an “option" on fluctuations in the coal market, the analysts say.
Tue, Feb. 17, 9:17 AM
- Walter Energy (NYSE:WLT) -10.1% premarket after reporting a wider than expected Q4 loss and revenues that fell well short of analyst estimates.
- WLT says Q4 sales of metallurgical coal sales declined to 2M metric tons from 2.9M, and forecasts 2015 met coal sales to fall to 8.5M-9M metric tons from 9.7M in 2014.
- Expects 2015 capex to be in line with 2014, while further reducing SG&A expenses by 10%.
- WLT suspended its quarterly dividend last month, following cuts or reductions at rivals Peabody Energy (NYSE:BTU) and Arch Coal (NYSE:ACI).
Fri, Feb. 13, 5:36 PM
Wed, Feb. 4, 11:56 AM
- Metals trader Trafigura could make a bid for Peabody Energy (BTU +1.7%) in its push to gain market share as it seeks to become the world's largest coal trader, according to an EnergyPlugged article.
- The report speculates that BTU may need to look for a strategic partnership amid the weaker global coal market, which fits well into Trafigura’s business model of acquiring stakes in strategic companies and assets around the world.
- BTU has mining interests in the U.S. and Australia, which means the combined operations of BTU and Trafigura could boost the latter’s position in marketing thermal coal to China as well as other Asian countries.
Tue, Feb. 3, 10:46 AM
- Arch Coal (ACI +8.9%) opens sharply higher after reporting a smaller than expected Q4 loss as it cut costs to $16.46/ton from $18.10/ton in the prior-year quarter.
- ACI says it is suspending its annual dividend to preserve current levels of liquidity, although Cowen analysts say the suspension will save only ~$2M/year.
- ACI says it had available liquidity of ~$1.2B at year-end 2014.
- Expects costs in the Powder River Basin and Appalachian region, which account for most of its coal production, to fall in 2015, reflecting an improved rail performance, the impact of lower diesel prices and a full year of steady production at its low-cost Leer mine in West Virginia.
- ACI also says it expects capital spending of $145M-$160M in 2015, roughly flat vs. 2014's $147M in capex.
- Forecasts FY 2015 coal sales of 130M-143M tons after selling 134.4M tons in 2014 and 35.2M tons in Q4 (+9% Y/Y).
- Other coal names also are higher: ANR +7.8%, BTU +5.6%, CLD +2.3%, WLB +2.6%, WLT +9.4%, CNX +1.7%, RNO +4.3%.
Wed, Jan. 28, 11:53 AM
- Peabody Energy (BTU -3.5%) is downgraded to Hold from Buy at BB&T, which notes that the share price is hardly cheap considering it bakes in metallurgical coal prices ~11% above the most recent quarterly benchmark.
- BTU says that even under a higher met coal price scenario, BTU still would have estimated net debt/EBITDA of 6.6x and a negative free cash flow yield; the company's projected numbers and the anticipated macro environment for coal simply do not justify a Buy rating, the firm says.
Tue, Jan. 27, 11:28 AM
- Peabody Energy's (BTU -6.7%) move to slash its quarterly dividend to less than a penny a share is helping push coal company stocks (NYSEARCA:KOL) lower: WLT -1.6%, ACI -1%, CNX -1.8%, CLD -2%, WLB -5.4%, ARLP -1.2%.
- Cowen analysts see the move as "a prudent move amid uncertain coal markets," and Sterne Agee says the dividend cut will save BTU $100M in annual cash payments.
- Citigroup's Brian Hu maintains a Buy rating on BTU, saying that although management expects U.S. thermal coal demand to fall by 50M-60M tons in 2015, "BTU is better insulated due to their heavily contracted position and Y/Y improvement in Southern PRB rail performance.”
Tue, Jan. 27, 8:35 AM
- Peabody Energy (NYSE:BTU) -6.4% premarket after falling far short of expectations for Q4 earnings and reducing its quarterly dividend to $0.0025/share from $0.085.
- BTU says Q4 overall revenue fell 3.3% Y/Y to $1.68B while sales volume slipped 0.5%; revenue fell 2.2% to $983M in its U.S. mining operations as revenue/ton dropped 5.8%, while revenue declined 5.6% to $676M in its Australian mining operations as revenue/ton fell 17%.
- For 2015, BTU expects sales volumes of 245M-265M tons with U.S. operations seeing a 2%-4% decline in revenues/ton and costs/ton; expects Australia metallurgical coal sales of 15M-16M tons, export thermal sales of 12M-13M tons, and cost/tons lower by 2%-4%.
- Plans $180M-$200M in 2015 capex, mostly allocated to sustaining capital items; specific projects include the Gateway North extension to replace production from the existing operation, and the Wolf Creek development in Colorado.
- For Q1, BTU targets adjusted EBITDA of $160M-$200M and an EPS loss of $0.39-$0.32 vs. analyst consensus estimate for a $0.24 loss.
Tue, Jan. 27, 8:06 AM
Mon, Jan. 26, 3:46 PM
- Peabody Energy (BTU +4.6%) is upgraded to In-line from Underperform with a $6.50 price target, raised from $6, at Imperial Capital, seeing BTU's free cash flow profile to equity improving over time as hedges roll off.
- The firm remains concerned about the impact of a dividend cut, coal headlines, and $3 natural gas in the U.S., but also says it is aware of a number of bullish factors for nat gas in H2 2015, including export demands that could improve.
Fri, Jan. 23, 12:53 PM
- Peabody Energy (BTU -5.6%) is downgraded to Negative from Stable at Standard & Poor's, based on the rating agency's view that metallurgical coal prices will remain depressed for at least another year.
- In light of updated price assumptions, the firm believes it is less likely that BTU can improve its credit measures to fall in line with the current aggressive financial risk profile assessment within the next 12 months.
- S&P reaffirms its BB- corporate credit rating on the company.
Thu, Jan. 22, 10:17 AM
- Peabody Energy (BTU -1.9%) says President/COO Glenn Kellow has been named President and CEO-Elect and will become CEO effective May 4.
- Kellow joined BTU in 2013 after a 28-year career with BHP Billiton, where he ultimately served as president of the multinational aluminum and nickel business with operations in South Africa, Australia, Mozambique and Colombia.
- Current Chairman and CEO Gregory Boyce will remain as Executive Chairman.
Wed, Jan. 14, 12:39 PM
- Citi cuts price targets for iron ore to $58 for 2015 and $62 for 2016, down from its prior estimates of $65 for both years, and lowers its outlook for thermal and met coal.
- Citi warns its downwardly revised forecast means it now expects earnings for major mining companies will fall by 9%-21% for 2015 and by 3%-16% in 2016.
- Rio Tinto (RIO -2.5%) is the exception, as Citi sees earnings rising 7.1% this year and 10.6% next year due to the company’s greater exposure to the weaker Australian dollar.
- The firm cuts its price target for Glencore (OTCPK:GLCNF -7.2%) by 8% to £3.60 from £3.90 and sees earnings falling 21% and 16% respectively in 2015 and 2016.
- Citi says it is still bullish on the sector, but warns that metals and mining companies will only slowly grind higher over the next few years.
- Also: BHP -4.5%, VALE -5%, FCX -12%, SCCO -4.9%, TCK -9.7%, CLF -4.4%, CENX -9.1%, MT -4.2%, X -4.9%, NUE -3.4%, STLD -2.6%, BTU -9.8%, ANR -8.8%, ACI -8.9%.
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