Deutsche Bank Maintains a 'Buy' on Patriot Coal (PCX); See Improving Cash Flow

Deutsche Bank maintains a 'Buy' on Patriot Coal (NYSE: PCX) price target of $12.00.

Deutsche analyst said, "Patriot Coal, based in St. Louis, Missouri, is the eighth largest coal producer in the US, with 31m tons of sales in 2010. Patriot Coal is also one of the leading met coal producers in the U.S., shipping 6.8m tons in 2010. The company currently operates 14 active mines in Appalachia and the Illinois Basin. Although its operations in the Central Appalachia face issues like structural declines and regulatory challenges, PCX's Illinois Basin assets balance out those issues, in our view. Based on our estimates, Patriot Coal should generate improving cash flow, partially as below-market contracts roll off and earnings reflect market prices. We anticipate PCX will invest in organic projects as cash flow improves."

"Our selected sample of NA coal companies should trade between 5x and 7x forward EBITDA, based on historical averages. We believe Patriot Coal should trade at the low end given its high cost structure, relative smaller scale, and recent lackluster performance."

For an analyst ratings summary and ratings history on Patriot Coal click here. For more ratings news on Patriot Coal click here.

Shares of Patriot Coal closed at $7.87 yesterday.

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