Market Overview

UPDATE: Nomura Reiterates Reduce Ratings, Lowers PT on Arch Coal on Structural Challenges

Related ACI
The Default Probabilities Of Struggling Energy Stocks
Morning Market Losers
Alpha Natural Affiliates to Idle Mines in Central Appalachia - Analyst Blog (Zacks)

In a report published Wednesday, Nomura reiterated its Reduce rating on Arch Coal (NYSE: ACI), but slightly lowered its price target from $6.00 to $5.00.

Nomura noted, “High leverage and long path for PRB recovery are risks. We believe Arch Coal is facing difficult headwinds in 2013 owing to a weak contract position in PRB and challenging markets for lower-quality coking coals in Appalachia. Given continued weak fundamentals, we are moderately reducing ASP and volume targets and now forecast 2013 EBITDA of $425mm and 2014 EBITDA of $558mm, ~25% below the Street. We find the stock expensive trading at 12.7x 2013E EV/EBITDA and 9.6x 2014E EV/EBITDA. Our revised $5 price target assumes ACI trades at 7.2x our mid-cycle EBITDA forecast of $714mm, our projection for 2015. PRB vintage issue remains a risk into 2014 and potentially 2015. The main lever to grow EBITDA in 2014 will be via higher met ASPs on volumes near 10mt in 2014, which we model at $105/ton vs. $94/ton in 2013.”

Arch Coal closed on Tuesday at $6.04.

Latest Ratings for ACI

Feb 2015Argus ResearchDowngradesBuySell
Feb 2015UBSMaintainsSell
Oct 2014FBR CapitalMaintainsOutperform

View More Analyst Ratings for ACI
View the Latest Analyst Ratings

Posted-In: NomuraAnalyst Color Price Target Analyst Ratings


Related Articles (ACI)

Around the Web, We're Loving...