Citigroup On Coal: Hold, Buy And Sell

Citigroup has published a research report on the pure coal producers, and has downgraded Arch Coal ACI, Alpha Natural Resources ANR from Buy to Hold and Patriot Coal Corporation PCX from Hold to Sell, but has raised Peabody Energy Corporation BTU. In the report, Citigroup writes "We analyzed reserves by production region across our coverage of pure coal producers, studying their historical production profile, growth prospects, cash margin history, and DD&A vs capital reinvestment trends to arrive at a $/ton reserve value. Using consistent commodity assumptions across all producers, we find that BTU and ANR offer better relative value, while PCX and MEE offer the least relative value. ACI sits in the middle. We also review some 2010 announced deals using the same methodology, including Walter-Western, Cliffs-INR, Massey-Cumberland and Peabody-Macarthur." Companies related to this report include: Arch Coal, Inc. ACI, PT to $33 from $30 Alpha Natural Resources ANR, PT to $58 from $55 Peabody Energy Corporation BTU, PT to $74 from $57 Massey Energy Company MEE, PT $31 Patriot Coal Corporation PCX, PT $14