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On Thursday, Bank of America lowered the price objective and reiterated Underperform ratings for four coal stocks, including
Walter EnergyWLT, which is being hit the hardest in Thursday's trading, down 17 percent.
For the next several years, “the industry can continue to be characterized by oversupply, falling marginal costs, growing substitutes, and a reluctance among miners to shut capacity given high barriers to exit,” said Timna Tanners, analyst at BofA.
Tanners' new “2014E benchmark hard coking coal price forecast falls to $132/mt from $153 and 2015E to $145/mt from $160, below estimated consensus.”
In addition to cutting Walter's price objective from $8 to $2, Tanners cut the price objectives of:
- Alpha Natural Resources ANR -- from $4 to $3, down 3.3 percent.
- Peabody Energy BTU -- from $19 to $18, down 1.4 percent. Arch Coal ACI -- from $3 to $2.50, down 1.1 percent. Tanners' only Buy rated coal stock is CONSOL Energy CNX, which is the analyst's top pick, "given its growing gas/liquids output and lower-cost met coal operations." Shares of CONSOL are flat in Thursday's trading.
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