Goldman Sachs has downgraded coal company, Peabody Energy Corporation(BTU) to “Neutral” on Tuesday.
The firm downgraded BTU from a “Buy” to “Neutral,” and have raised their price target from $26 to $28. This price suggests a 0.6% increase over the stock’s current price of $27.82, and a -18% decrease from the stock’s YTD price of $33.11.
An analyst from the firm commented, “we continue to view BTU favorably given its leverage to our view thermal coal prices/demand will improve in 2013 via low cost positions in the PRB and Illinois Basins, leading exposure to Asia demand growth via its Australia business and strong balance sheet,” the analyst notes. “However, risk/reward for shares appears more balanced after BTU has rallied with other US coal stocks as signs China steel production is picking up and domestic thermal coal inventories are slowly falling have driven investors that have been on the sidelines to increase exposure to US coal stock.”
Peabody Energy shares were down $1.09, or -3.77% during premarket trading Tuesday.
The Bottom Line
Shares of Peabody Energy (BTU) have a 1.17% dividend yield, based on last night’s closing stock price of $28.95. The stock has technical support in the $22-$25 price area. If the shares can firm up, we see overhead resistance around the $31-$32 price levels.
Peabody Energy Corporation(BTU) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.0 out of 5 stars.
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