UPDATE: Citigroup Downgrades Alpha Natural Resources on Multiple Negative Factors

In a report published Monday, Citigroup analyst Brian Yu downgraded the rating on Alpha Natural Resources ANR from Neutral to Sell, but lowered the price target from $7.10 to $5.10. In the report, Citigroup noted, “ANR shares have risen 36% in 3Q despite falling spot prices. We recognize the company positively surprised on their 2014 cost guidance ($64-$70/ton vs $72.61/ton estimate for 2013) but we do not believe lower costs will be sufficient to offset weak spot met coal pricing and the expiration of favorable met coal contracts with domestic steel producers. Entering into 2013, the company had contracted 9.6 mln tons of met coal priced at an average of $113.25/ton and it is very unlikely, in our view, that the company can enter 2014 with an average met coal contract position close-to or above $100/ton.” Alpha Natural Resources closed on Friday at $8.08.