On Monday, analysts at Nomura Securities upgraded Peabody Energy Corporation (BTU) as current market concerns are already factored into the St. Louis-based coal company’s valuation.
The analysts upgraded BTU from “Reduce” to “Neutral” with a price target of $22. This target suggests a a slight upside to Friday’s closing price of $21.84.
“We believe the cost pressures facing BTU are largely well known by the market and our recent visit with management gave us increased confidence that BTU can achieve improved unit costs in 2H13,” Nomura analyst Curt Woodworth stated. “Correlation to the underlying commodity remains a key risk factor to press a short trade on BTU given our expectation for PRB prices to move higher by the end of 2013 and the potential for improved met prices as global steel production improves in Asia. We believe a solid summer coal burn driven by reverse switching and normal weather can result in significant draws of PRB inventories. Peabody continues to trade at rich multiples even off 2014 our estimates (7.9x EV/EBITDA), which already assume a healthy recovery in benchmark met coal prices back to $190/tonne.”
Peabody Energy shares were down 24 cents, or -1.10%, during pre-market trading on Monday. The stock is down -34.32% over the past year.
The Bottom Line
Shares of Peabody Energy (BTU) have a dividend yield of 1.56% based on Friday’s closing price of $21.84 and the company’s annualized dividend payout of 34 cents per share.
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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