UBS maintains a 'Buy' on Walter Energy (WLT); Guidance Reduced...Is This Enough to Quell M&A Speculation?

UBS maintains a 'Buy' on Walter Energy (NYSE: WLT) price target lowered from $120 to $110.

UBS analyst says, "We are cutting our 4Q EPS estimate to $1.52 from $2.05 (2011E to $6.66 from $7.21) and our 2012 EPS est. to $6.06 from $7.03 on account of the guidance update. We are also lowering our 2013 EPS estimate to $5.87 from $6.88, to reflect our concerns that longer term production targets may need to be revised."

"We are not surprised by the guidance cut as we were below the range (UBSe 12.65mm tons); however, it was a little steeper than what we were expecting. Additionally, given the ongoing challenges at the Alabama mines we begin to question longer term targets and are adjusting our estimates accordingly. Given the extreme amount of M&A speculation with WLT, we suspect that this may cool speculation as interested parties may question normalized production run rates."

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 $58.75 yesterday.

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