Bank of America Merrill Lynch Reiterates “Underperform” Rating for Peabody Energy Corporation; Lowers Price Target (BTU)


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On Friday analysts at Bank of America Merrill Lynch reaffirmed its rating on Peabody Energy Corporation ( BTU ) while also cutting its price target for the coal company.

The analysts give BTU an "Underperform" rating and lowered the price target from $22 to $20. The new price target is a -27.7% downside from Friday's closing price of $27.68.

An Bank of America Merrill Lynch analyst noted, "Our 2013E EPS falls sharply to reflect guidance of higher-than-expected costs at its Australian coal ops and lower volumes overall. We now model 2013 EPS of $0.60 from $1.30 and 2014 at $1.75 from $2.50. BTU said in a release 2013 Australian costs would rise 5% y/y, with Q1 up 10% from ytd levels, U.S. thermal volumes were seen down 8-12M tons y/y to 180-190M tons, and Australian volumes were guided up 2-3M tons y/y to 33-36M tons. BTU expected Q1 would be trough earnings for 2013 on the view that met prices recover and costs ease."

Peabody Energy shares were up 20 cents, or +0.72%, in premarket trading on Monday.

The Bottom Line
Shares of Peabody Energy ( BTU ) have a 1.23% dividend yield, based on Friday's closing stock price of $27.68. The stock has technical support in the $22-$25 price area. If the shares can firm up, we see overhead resistance around the $29-$30 price levels.

Peabody Energy Corporation ( BTU ) is not recommended at this time, holding a DARS™ Rating of 3.0 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Stocks
Referenced Stocks: BTU

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