Tuesday, July 6, 2010

Walter Energy (WLT) Review

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Walter Energy Upgraded to “Outperform” at FBR Capital (WLT)
FBR Capital - Steel Concerns Softened by Supply Side; Adjusting Our 2010-2012 Met Coal Price Forecast and Upgrading Walter Energy (NYSE: WLT) (to Outperform from Market Perform) FBR analyst said, "We have analyzed global steel demand by end markets to better gauge the true underlying consumption patterns in a volatile marketplace. Our analysis points to a flat 2011 steel demand (down from 8% in 2010 and 5.4% earlier expected in 2011), driven in part by tightening credit and weakening global economies. While the year-over-year change in demand is sharp, the shortage of high-quality met coal and impacts from rising global safety standards should soften the potential for material oversupply."We expect China imports to slow in 2H10 and in 2011 and, as a result, crossover tons to China and Europe will likely slow. High-quality met coal will remain relatively tight but lower-quality met coal price spreads should widen further."
The firm boosted its rating on WLT to “Outperform” from “Market Perform,” and raised its price target to $88 from $85. That new target would represent a 44% upside to WLT’s Tuesday closing price of $61.27. Itz Stock Chart's suggested WLT on May 6th @ $75 in the ITZ PIX portfolio. Consensus earnings full year 2010 $9.20 & 2011 $11.61   Coal Industry Review & Outlook - June 2010  link

David Khani, of FBR Capital, tells the Fast Money traders why he upgraded Walter Energy.

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