Davenport Expects Strong Rebound In U.S. Coal Demand & Exports In 2010 - Adjusts Estimates, Downgrades BTU & JRCC

October 15, 2009 11:46 AM EDT

Davenport analyst says, "With six of the Buy-rated stocks in our coal coverage universe trading either near (ANR, MEE & WLT) or slightly above (CNX, BTU & JRCC) our price targets, we are publishing updated U.S. supply/demand coal forecasts and revising our price deck to incorporate higher prices on met coal in 2010 and 2011 than what we had previously assumed, resulting in higher earnings estimates for the U.S. producers in our coal coverage universe."

"We are leaving our steam coal price deck unchanged from our prior update in early June. In short, we believe the thesis behind our last Coal Quarterly, when we raised our 2011 price deck for both steam and met coal, remains intact."

"Based on these higher estimates, we are raising our price targets on Buy-rated coal equities: Walter Energy (NYSE: WLT) from $64 to $72, Alpha Natural Resources (NYSE: ANR) from $44 to $48, Massey Energy (NYSE: MEE) from $36 to $40 and CONSOL Energy (NYSE: CNX) from $50 to $57. We are lowering our ratings from Buy to Neutral on both Peabody Energy (NYSE: BTU) and James River Coal Company (Nasdaq: JRCC) ahead of each company’s Q3 earnings release after reaching our respective $40 and $21 price targets."

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