Barclays on North American Metals & Mining: Accelerating Deterioration - Downgrading Cloud Peak (CLD)
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Rating Summary:
4 Buy, 10 Hold, 5 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
4 Buy, 10 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Barclays on North American Metals & Mining/U.S. Thermal: Accelerating Deterioration; Downgrading Cloud Peak Energy (NYSE: CLD)
Barclays analyst, David Gagliano, said, "In recent months, thermal coal fundamentals have deteriorated significantly more than we expected when we initiated with a cautious view towards US thermal back in early November."
Gagliano cites three main reasons:
1) Incremental switching risk - Natural gas prices below $3.00/Mcf are impacting even the lowest cost PRB coals.
2) Weak winter demand - We are exiting the peak winter-heating months, and it hasn't been good.
3) Limited supply cuts - Given the US coal producers are 'sold out' for 2012, the incentive/opportunity to cut production near-term is limited until contracts roll off beginning in 2013.
Therefore, Gagliano downgraded Cloud Peak Energy (NYSE: CLD) from Equalweight to Underweight. PT cut from $27 to $17 and FY12 from $1.87 to $1.68.
Alpha Natural Resources (NYSE: ANR) maintained at Overweight, PT lowered from $35 to $32 and FY13 EPS estimate lowered from $0.92 to $0.85.
Arch Coal (NYSE: ACI) maintained at Equalweight, but PT lowered $1 to $15 and FY13 from $1.79 to $1.25.
Peabody (NYSE: BTU) maintained at Overweight, but PT cut $2 to $45 and FY13 lowered from $5.32 to $5.10
Barclays analyst, David Gagliano, said, "In recent months, thermal coal fundamentals have deteriorated significantly more than we expected when we initiated with a cautious view towards US thermal back in early November."
Gagliano cites three main reasons:
1) Incremental switching risk - Natural gas prices below $3.00/Mcf are impacting even the lowest cost PRB coals.
2) Weak winter demand - We are exiting the peak winter-heating months, and it hasn't been good.
3) Limited supply cuts - Given the US coal producers are 'sold out' for 2012, the incentive/opportunity to cut production near-term is limited until contracts roll off beginning in 2013.
Therefore, Gagliano downgraded Cloud Peak Energy (NYSE: CLD) from Equalweight to Underweight. PT cut from $27 to $17 and FY12 from $1.87 to $1.68.
Alpha Natural Resources (NYSE: ANR) maintained at Overweight, PT lowered from $35 to $32 and FY13 EPS estimate lowered from $0.92 to $0.85.
Arch Coal (NYSE: ACI) maintained at Equalweight, but PT lowered $1 to $15 and FY13 from $1.79 to $1.25.
Peabody (NYSE: BTU) maintained at Overweight, but PT cut $2 to $45 and FY13 lowered from $5.32 to $5.10
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