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Peabody shares rise after Nomura upgrade

Published: 04:43:27 PM, Mon 18 March 2013 UTC

NEW YORK (AP) — Shares of Peabody Energy Corp. rose Monday after a Nomura analyst upgraded the coal company's stock, saying that the risks surrounding it are now factored into its stock.

THE SPARK: Curt Woodworth raised his rating for Peabody shares to "Neutral" from "Reduce" and backed his $22 price target.

THE BIG PICTURE: Like other coal companies, St. Louis-based Peabody has struggled amid soft demand that has driven down coal prices. Over the past year, Peabody's shares have lost about 35 percent of their value.

In January, Peabody said it posted a $1.01 billion loss for the fourth quarter on weaker prices for coal used in steel manufacturing. But excluding one-time items, the company's adjusted profit beat Wall Street predictions.

Peabody also issued a first-quarter loss forecast that was slightly worse than analysts expected.

THE ANALYSIS: Woodworth said that a number of key market concerns and profit risks are now reflected in the company's stock price, which is hovering near his $22 price target.

"We believe the cost pressures facing Peabody are largely well known by the market and our recent visit with management gave us increased confidence that Peabody can achieve improved unit costs in second half 2013," Woodworth wrote in a note to investors.

THE SHARES: Up 58 cents, or 2.6 percent, to $22.41 in midday trading, after peaking at $22.69 earlier in the day. Over the past 52 weeks, the company's shares have traded between $18.78 and $33.70.

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