UPDATE: JP Morgan Initiates Cloud Peak Energy at Neutral, $16 PT on Sector Challenges

JP Morgan initiates its coverage on Cloud Peak Energy

with a Neutral rating and a price target of $16. JP Morgan notes, "We believe CLD, the only publicly listed pure play Powder River Basin (PRB) coal producer, has a solid balance sheet, an experienced management team, and an enviable contract position in the current weak coal demand environment. We like the potential long term upside for CLD driven by new emissions regulations which may support low sulfur PRB coal demand and increasing exports to Asian customers. However, we believe medium-term overcapacity in the PRB, low natural gas prices, and weak coal demand are significant short-term challenges." CLD closed at $15.44 on Thursday.