Shares of Peabody Energy BTU are trading lower after Deutsche Bank downgraded shares of the company from buy to hold and lowered the price target from $22 to $19 on valuation and an elevated cautionary outlook.
Deutsche Bank’s laundry list of concerns range from global economic growth to policy, threatening both production and supply. In addition, Deutsche Bank cites “project execution risk” regarding several Australian assets which could lead to higher than expected expenses. The research note also adds that, “Further risks for coal companies stem from contract pricing in place vis-à-vis the direction of spot prices.”
The $19 price target was derived with a DCF and one times NAV. The price target is equivalent to 9.6 times 2015 EBITDA.
Shares of Peabody were last trading at $16.45 Monday, down nearly one percent.
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