UPDATE: Imperial Capital Initiates Coverage of Peabody Energy Corporation

In a note released Wednesday morning, Imperial analyst, Matthew Farwell initiated coverage of Peabody Energy Corporation at Underweight with a $5 price target. Farwell commented, "While Peabody has a stellar reputation and a strong management team, in our view, its shares and senior notes likely will remain under pressure from rising leverage and instability in global coal markets." He went on to note Peabody has traditionally been viewed as a "best-of-breed" coal company. That being said, he stressed the company is not immune to a deteriorating supply and demand backdrop of coking coal. Amid the note from Imperial Capital, shares of Peabody Energy have dropped almost three percent in the early part of Wednesday's market session.