Walter Energy Upgraded on Coal Price Outlook

Monday, February 08, 2010

by: The Associate Press

NEW YORK — Shares of Walter Energy Inc. are poised to climb with rising metallurgical coal prices, said an analyst Monday as he upgraded the coal producer's stock.

Brean Murray Carret analyst Jeremy Sussman said he expects strong macroeconomic conditions to drive higher metallurgical coal prices in 2010, and believes Walter is well positioned to benefit from this and outperform its peers.

As the economy edges toward a recovery he expects demand and pricing to strengthen for metallurgical coal, which is used in steel manufacturing.

Sussman noted that metallurgical coal imports into China climbed 22 percent in December from November. Going forward, he expects investors to increasingly focus on metallurgical coal prices, as it is "the next large catalyst in the coal space."

"When contracts ultimately get signed in March or April, we would expect Walter to be a large beneficiary," he added.

Sussman upgraded the stock to "Buy" from "Hold" and raised his price target to $80 from $67.

Shares of the Tampa, Fla., company rose 53 cents to $68.07. Over the past 52 weeks, the stock traded at a low of $15.19 in March and a high of $83.34 in January.

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