UPDATE: BMO Capital Markets Raises PT to $36.50 Following Strong Report

BMO Capital Markets reiterated its Outperform rating on Peabody Energy

and increased its price target from $38 to $39.50. BMO Capital Markets commented, "The coal markets remain challenging, but may be turning the corner. U.S. thermal coal enters the winter heating season with seasonally higher natural gas pricing and lower U.S. coal production. Likewise, a combination of production cuts and modestly stronger Chinese demand has caused spot met coal pricing to rebound slightly in October. Peabody's U.S. assets are in lower cost, defensive basins including the Powder River Basin and Illinois Basin which are competitive even at very low natural gas prices. Australian margins are expected to improve on increasing volumes, the switch to more owner-operated mines, and following remediation at legacy Macarthur mines." Peabody Energy closed at $28.95 on Monday.