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Peabody shares after one-day gains

The Associated Press

Peabody Energy Corp.'s share fell Wednesday after rising Tuesday on mixed fourth-quarter results.

THE SPARK: The coal producer reported that it lost $1.01 billion on weaker prices for coal used in steel manufacturing. After adjusting for one-time items, it earned 36 cents per share, beating market expectations of 25 cents per share, according to FactSet.

It also forecast a first-quarter loss of 4 to 26 cents per share, which is worse than the 1 cent per share loss that analysts predicted.

THE BIG PICTURE: Peabody's shares had fallen about 30 percent in the 52 weeks leading up to its earnings. Like other coal companies, Peabody has been experiencing soft demand for coal.

The company told investors that it expects earnings to rise this year as demand and pricing improves, but did not issue a specific earnings forecast. Peabody is also encouraged by a pickup in economic growth in China. Also its shift away from the U.S., where demand is soft, toward Australia appears to be paying off.

THE ANALYSIS: Sterne Agee analyst Michael Dudas kept a "Buy" rating on Peabody shares, and said he expects the first quarter will mark the low point of its earnings. The analyst expects Peabody's results will improve on higher prices and lower costs in Australia.

Brean Capital analyst Lucas Pipes took a more moderate approach, maintaining a "Hold" rating with a flat earnings outlook for 2013 and 2014. He thinks Peabody's U.S. revenues will be lower than anticipated and costs in Australia will be higher.

SHARE ACTION: Peabody shares rose more than 4 percent Tuesday to close at $26.56. On Wednesday, the stock fell $1.20, or 4.5 percent, to $25.36 in afternoon trading. The shares have traded between $18.78 and $38.96 in the past 52 weeks.