Brean Murray Carret & Co. Downgrades Walter Energy (WLT) to Hold, Lower Met Coal Prices

September 21, 2012 7:50 AM EDT Send to a Friend
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Price: $3.25 +4.84%

Rating Summary:
    3 Buy, 19 Hold, 6 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 41
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Brean Murray Carret & Co. downgraded Walter Energy (NYSE: WLT) from Buy to Hold, citing a reduced met coal price deck through 2014. The firm lowered their fair value estimate from $46 to $31.

The firm comments, "As the only pure‐play met coal producer, Walter’s exposure to our reduced price estimates is quite significant. In addition to these earnings revisions, we believe that the high production costs at Walter’s Canadian operations, particularly in the current price environment, are concerning. The absence of a clear strategy for these operations at today’s prices does create an overhang for the stock,
in our opinion. We believe that investors need more clarity on whether some of the Canadian mines (Brule and Willow Creek, especially) may be temporarily idled or why and for how long the company may continue to operate the mines, despite the currently weak prices. Lastly, in this demand environment, we view Walter’s production guidance of 11.5‐13.0 million metric tons of met coal as too aggressive."

For an analyst ratings summary and ratings history on Walter Energy click here. For more ratings news on Walter Energy click here.

Shares of Walter Energy closed at $35.95 yesterday.


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