UPDATE: BMO Capital Markets Reiterates Underperform Rating, Raises PT on Arch Coal

In a report published Monday, BMO Capital Markets reiterated its Underperform rating on Arch Coal ACI, and raised its price target from $4.00 to $7.00. BMO Capital noted, “BMO Research rates Arch Underperform. Arch is constrained by above-average debt levels following last year's ICG acquisition, which also increased Arch's exposure to Appalachian coal. Appalachian coal faces continued headwinds both from low met coal pricing and competition from natural gas. BMO Research prefers defensive names with no exposure to high-cost Central Appalachian production, such as Peabody (BTU-NYSE; US$28.22, Outperform).” Arch Coal closed on Friday at $8.09.