Nomura Securities on Patriot Coal (PCX) Bankruptcy Implications; Add to Positions in CNX & ANR

July 10, 2012 8:09 AM EDT Send to a Friend
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Price: $0.61 --0%

Rating Summary:
    1 Buy, 14 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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Nomura Securities maintains a 'Reduce' on Patriot Coal (NYSE: PCX) price target of $5.00.

Analyst, Curt Woodworth, said, "PCX has filed voluntary petitions on July 9, 2012 for reorganization under Chapter 11 of the Bankruptcy Code. This outcome was not fully unexpected given the inability for PCX to refinance debt immediately following the contract default of a met sale on May 15. The free cash flow outlook for PCX had continued to worsen over the course of 2012, and we currently project negative FCF of $157mm for 2012 and negative FCF of $172mm in 2013. While the filing will likely pressure the entire sector after a negative impact late in trading today, we would use weakness to add to positions in CONSOL Energy (NYSE: CNX) and Alpha Natural Resources (NYSE: ANR), where valuations are compelling. We see ACI (Reduce rated) as overvalued and remain Neutral on Peabody (NYSE: BTU) despite an attractive valuation owing to EPS risk in 2013 for seaborne thermal price contracts and FX headwinds as hedges roll off."

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 $0.61 yesterday.


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