FBR Capital Reiterates an 'Outperform/Top Pick' on Arch Coal (ACI); Good Quarter despite Low PRB Volumes
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Price: $12.14 -2.25%
Rating Summary:
18 Buy, 17 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
Rating Summary:
18 Buy, 17 Hold, 7 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 21 | New: 20
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FBR Capital reiterates an 'Outperform/Top Pick' rating on Arch Coal Inc (NYSE: ACI), PT $50.
FBR analyst says, "Arch Coal reported a slightly better-than-expected quarter despite lower-thanexpected production, in part due to a few central themes: outstanding cost controls, safe operations, and a rising met coal output. We are trimming our 2011 estimates by about 4% but raising our 2012 and 2013 outlook by 4%; but we recognize that the company has been walking up estimates during the year. More importantly, Arch, in the short term, is positioned nicely to back-fill exports, lock in higher met coal prices on its remaining uncontracted volumes, and generate significant free cash flow. Over the next three to four years, the company will benefit from rising emission standards and an eventual port expansion at Millennium that will drive PRB prices meaningfully higher (the second leg of the story)."
"We are lowering our 2011 EPS/EBITDA estimates by about 4% to $2.61/$1,038M, from $2.69/$1,090M. The changes reflect 1Q11 results, 6MTs lower PRB volumes, and higher-thanexpected CAPP cost guidance ($2.5/ton), partially offset by solid contract prices and a modest increase (0.3 MTs) in met volumes expectations. However, we are increasing our 2012 and 2013 estimates to $3.76/$1,291M and $4.26/$1,374M, from $3.57/$1,251M and $4.21/$1,366M, to reflect higher-priced contracts."
For more ratings news on Arch Coal Inc click here and for the rating history of Arch Coal Inc click here.
Shares of Arch Coal Inc closed at $34.01 yesterday.
FBR analyst says, "Arch Coal reported a slightly better-than-expected quarter despite lower-thanexpected production, in part due to a few central themes: outstanding cost controls, safe operations, and a rising met coal output. We are trimming our 2011 estimates by about 4% but raising our 2012 and 2013 outlook by 4%; but we recognize that the company has been walking up estimates during the year. More importantly, Arch, in the short term, is positioned nicely to back-fill exports, lock in higher met coal prices on its remaining uncontracted volumes, and generate significant free cash flow. Over the next three to four years, the company will benefit from rising emission standards and an eventual port expansion at Millennium that will drive PRB prices meaningfully higher (the second leg of the story)."
"We are lowering our 2011 EPS/EBITDA estimates by about 4% to $2.61/$1,038M, from $2.69/$1,090M. The changes reflect 1Q11 results, 6MTs lower PRB volumes, and higher-thanexpected CAPP cost guidance ($2.5/ton), partially offset by solid contract prices and a modest increase (0.3 MTs) in met volumes expectations. However, we are increasing our 2012 and 2013 estimates to $3.76/$1,291M and $4.26/$1,374M, from $3.57/$1,251M and $4.21/$1,366M, to reflect higher-priced contracts."
For more ratings news on Arch Coal Inc click here and for the rating history of Arch Coal Inc click here.
Shares of Arch Coal Inc closed at $34.01 yesterday.
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