Massey shares drop on 3Q profit fall, outlook

Massey Energy shares drop on 68 percent decline in 3rd-qtr profit, slashed shipments outlook

• On 2:44 pm EDT, Wednesday October 28, 2009

NEW YORK (AP) -- Shares of Massey Energy Co. tumbled on Wednesday, a day after the mining company posted a 68 percent plunge in third-quarter profits and cut its full-year coal shipments outlook.

Shares of the coal producer dropped $2.44, or 7.8 percent, to $28.87 in afternoon trading. The stock has ranged from $9.62 to $34.63 over the past year.

After the markets closed Tuesday, Massey said its third-quarter profits fell to $16.5 million, or 19 cents per share, due to a downturn in coal sales and shuttered plants.

Massey reduced its full-year shipment outlook to range between 37.5 million to 38.5 million tons, from a prior forecast of 38.5 million to 40.5 million tons.

Dahlman Rose analyst Daniel Scott in a note to clients said that concerns were raised by Massey's weak steam coal sales and low price realizations for metallurgical coal used in steel making. However, he maintained a "Buy" rating and a $39 price target.

Stifel Nicholaus & Co. analyst Paul Forward said the company's third-quarter coal volumes missed his estimates, but margins held up due to a mix shift toward higher-price metallurgical and industrial coal. Based on his coal price and operating cost projections through 2011, Forward maintained a "Buy" rating and a $40 price target for the company.

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