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Walter Energy, Inc. Common Stoc Message Board

  • blackboxfund blackboxfund Aug 31, 2013 8:03 AM Flag

    Goldman still has WLT as a sell, but...I think it acted GREAT this week considering everything negative

    On Friday afternoon Goldman Sachs analyst Brian Singer put out a note on coal, maintained Neutral coverage on the group. He is cautious on the recovery in met and sees demand challenges in thermal.

    "Spot met coal prices have risen to $146/MT and are now above 3Q benchmark settlement level of $145/MT and slightly below our 4Q benchmark forecast of $150/MT. The recovery in spot prices is in line with our view and has been driven by renewed buying interest from China and relatively tight supply from Australia (which we believe is temporary due in part to vacations and port maintenance work). However, we still see 15-20 MM MT oversupply and believe wider supply reductions/rationalizations will be needed as demand growth for met coal slows. As such, we reiterate our Neutral coverage view, which reflects our conclusion that the path to a recovery in metallurgical coal prices is likely to be slow."
    Regarding thermal, Singer said, "While we see an improvement in thermal coal prices as natural gas prices recover, we continue to see demand in the US challenged long-term by coal plant retirements . . . Despite thermal inventories trending near normal levels in PRB and NAPP, milder than normal summer weather and low gas prices have impeded a recovery in thermal coal prices. We continue to expect thermal coal prices to improve in 4Q13 as inventories fall further."

    Goldman has Buy rating on select coal stocks, including SunCoke Energy Inc. (NYSE: SXC) and Cloud Peak Energy Inc. (NYSE: CLD). Walter Energy, Inc. (NYSE: WLT) and Alpha Natural Resources are Sell-rated.

    Sentiment: Strong Buy

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