Arch Coal, Alpha Natural lag coal industry in dire straits, Credit Suisse says

May 26, 2015 3:19 PM ETArch Resources, Inc. (ARCH)ARCH, ANRZQ, BTU, CLDPQ, KOLBy: Carl Surran, SA News Editor30 Comments
  • Credit Suisse analysts find little reason to favor coal equities amid a "dire outlook" for the group, initiating Arch Coal (ACI -12.2%) and Alpha Natural Resources (ANR -12.3%) with Underperform ratings and $0.50 share price targets, and Peabody Energy (BTU -5.8%) with a Neutral view and $4.50 target.
  • ANR suffers the greatest liquidity risk, the firm says, as negative free cash flow and upcoming debt maturities eat into its existing liquidity position, while ACI fares somewhat better but still is likely to burn through cash for the next several quarters; both companies are limited in their ability to borrow more debt and both face revolver maturities in mid-2016.
  • Cloud Peak Energy (CLD -0.9%) - the coal stock “least likely to cause sleepless nights” - is started with an Outperform rating and $11 price target.
  • Adding to ACI's woes are Friday's news that the company is in talks with restructuring advisers as it looks to reduce its debt, and the receipt of delisting notice from the NYSE.
  • KOL -2.4%.
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