UPDATE: BMO Capital Markets Downgrades Alpha Natural Resources to Underperform

BMO Capital Markets reduced its rating on Alpha Natural Resources

from Outperform to Underperform and lowered its price target from $18 to $5. BMO Capital Markets said, "BMO is downgrading the rating on Alpha Natural Resources to Underperform from Outperform based on its relatively high debt levels, deteriorating margins, and weak demand for Appalachian coal. … BMO's US$9 NPV is down 75% on higher cash costs. The NPV is based on a 10% discount rate, long-run pricing of US$175/mt FOB met coal and US$72/st FOR thermal coal. BMO's US$5 target price represents 55% P/NPV and 4.7x FY2013E EV/EBITDA." Alpha Natural Resources closed at $7.63 on Friday.