Patriot Coal officials said demand for met coal has weakened in the last few weeks, especially export demand. Demand from China, the world’s largest importer of met coal, is expected to remain weak through the first half of the year, although demand is expected to rise in the second half as Chinese and European economies begin to grow again. Total consumption of met coal could fall by 13 million metric tons in 2012.

In the late morning, Patriot Coal shares are down more than -9% at $8.18 in a 52-week range of $6.92-$29.20.

Shares in Alpha are down nearly -8% at $20.76 in a 52-week range of $15.49-$62.65.

James River shares are down more than -8% at $6.77 in a 52-week range of $5.41-$25.59.

Steel maker Arcelor Mittal is down nearly -2%, while US Steel and AK Steel are both down about -3%.

Paul Ausick

After the first half hour of trading this morning, Orchard Supply is up 56% at $39.00. The home improvement store, formerly part of Sears Holdings Corp. (NASDAQ: SHLD), held its IPO this morning at $25/share. Trading has been light, with less than 5,000 shares trading hands following the initial offering.

Rambus is up more than 10% at $8.32. Volume is heavy, with about 25% of the daily average already having been traded. The semiconductor intellectual property company has raised its revenue guidance from $66-$71 million to $83 million for the quarter ended in December.

Yingli Green Energy is up nearly 10% at $4.17. Volume is fairly heavy, with about 20% of the daily average already traded. The solar PV maker is getting a bounce from news stories projecting a better quarter for solar makers.

Aveo is down nearly -14% at $14.84. Volume is already 4x the daily average. The pharmaceutical maker reported that its liver cancer drug performed better than a competitor in late-stage trials, but investors were expecting a larger improvement.

James River is up more than 9% at $7.56. Volume is heavy, with 35% of the daily average already having been traded. The coal miner has been undervalued according to some analysts, who expect coal miners to perform well in 2012 compared with alternative energy sources.

Paul Ausick

The unofficial closing bells put the DJIA up more than 101 points to 12,170.18 (0.84%), the NASDAQ rose more than 32 points (1.2%) to 2,727.49, and the S&P 500 rose 1.17% or more than 14 points to 1,275.93.

There were several analyst upgrades and downgrades today, including Aixtron SE (NASDAQ: AIXG), which we noted in our story on LED lighting this morning and was raised to ‘equal weight’ at Morgan Stanley. Other changes included AstraZeneca PLC (NYSE: AZN) cut to ‘underweight’ at Morgan Stanley; Honeywell International (NYSE: HON) raised to ‘buy’ at Citigroup; Humana Inc. (NYSE: HUM) reiterated as ‘buy’ and target price raised to $95 at Argus; Plains All-America Pipeline L.P. (NYSE: PAA) raised to ‘buy’ at Wells Fargo; and Alcatel-Lucent (NYSE: ALU) cut to ‘neutral’ at BofA/ML.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Fuel Tech, Inc. (NASDAQ: FTEK) is up about 22%, at $6.63; Iridium Communications Inc. (NASDAQ: IRDM) is up nearly 16%, at $7.34; Exide Technologies (NASDAQ: XIDE) is down more than -32%, at $3.04, after posting a new 52-week low of $2.98 earlier today; WMS Industries Inc. (NYSE: WMS) is down nearly -17%, at $18.25; James River Coal Corp. (NASDAQ: JRCC) is down nearly -9%, at $9.45; and Procera Networks, Inc. (AMEX: PKT) is up nearly 21%, at $14.31, after posting a new 52-week high earlier today of $14.38.

Several other standouts from today are as follows…

Republic Airways Holdings Inc. (NASDAQ: RJET)  is up more than 57%, at $4.24. The company said that it is looking at selling or spinning off its Frontier Airlines unit.

Opexa Therapeutics, Inc. (NASDAQ: OPXA) is up nearly 33%, to $1.37. The company announced that its drug treatment for multiple sclerosis has received the Fast Track designation from the FDA.

Dynegy Inc. (NYSE: DYN) is up more than 28%, at $3.79. The utility company has said that several of its units have filed for bankruptcy. We covered the unusual bankruptcy boost in more detail earlier today.

Targacept, Inc. (NASDAQ: TRGT) is down nearly -59%, at $7.75, a new 52-week low. The company announced this morning that its anti-depressant drug failed a recent first phase trial.

McCormick & Schmick’s Seafood Restaurants Inc. (NASDAQ: MSSR) is up more than 27%, at $8.65. The company has accepted a buyout offer of $8.75/share in cash from Landry’s Inc.

Solazyme, Inc. (NASDAQ: SZYM) is up more than 17%, at $10.98. The company has signed tentative contracts for 90% of its feedstock through 2015. We covered potential upside in the biofuel sector earlier this week.

Stay tuned for Wednesday. Federal Reserve chairman Ben Bernanke is giving a speech in the morning and Federal Reserve governor Daniel Tarullo gives a speech in the afternoon. We have noted the following events (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 9:30 a.m. – Wholesale trade report
• 10:30 p.m. – EIA weekly petroleum status report
• 1:00 p.m. – US Treasury 10-year note auction

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Paul Ausick

Alpha Natural Resources has cut its 2011 coal shipment targets down to 102.5 to 109.5 million tons from a prior range of 104 to 112 million tons. Lower metallurgical coal exports to Asia are forcing it to cut production at some of its domestic coal mines.  The company is also reviewing its 2012 estimates as well with global market conditions and it will adjust the 2012 at its next earnings report.

Walter Energy’s lower guidance is due to adverse weather conditions at its Alabama mining site and in its northeast British Columbia site.  Walter now sees earnings of $1.00 to $1.16 EPS for the current quarter and sees $2.63 to $2.95 EPS next quarter.  Thomson Reuters had estimates of $3.23 EPS this quarter and $3.16 EPS next quarter.  Metallurgical coal sales guidance was cut for the second half of 2011 to 5.2 million metric tonnes from a prior target of 5.9 million metric tonnes.

Patriot Coal Corporation (NYSE: PCX), Arch Coal Inc. (NYSE: ACI), and James River Coal Co. (NASDAQ: JRCC) are all getting hit hard: Patriot is down 6.5% at $10.66 and the new 52-week range is $10.35 to $29.20; Arch Coal is down 6.4% at $16.85 and the new 52-week trading range is $16.70 to $36.99; James River is down 5.6% at $8,55 and the new 52-week range is $8.48 to $27.06.  Alpha is down over 7% at $25.07 and the new 52-week range is $23.90 to $68.05 with that low being seen today.  Walter is down over 10% at $66.93 and the new 52-week range is $63.88 to $143.76.

Oddly enough, Yanzhou Coal Mining Co. Ltd. (NYSE: YZC), a steam coal and metallurgical coal player in China, is only down 1.2% at $25.37 and the 52-week trading range is $21.70 to $41.89.

The Market Vectors Coal ETF (NYSE: KOL) is also down ‘only’ 2.4% at $35.88 and its 52-week trading range is $35.73 to $51.87.

Weather is one thing, but a slowing demand out of Asia is another issue.  The world is hoping that growth in Asia can remain high enough that the U.S. and Europe can still avoid a recession or that they can limit the impact of a new recession.  Too much time has passed for there to be a true double-dip recession, but a new poll suggests that 80% of America feels like the recession never even ended.

In copper, a leading indicator, Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), also suffering from a strike in Indonesia, is down 6.2% at $36.14 and its new 52-week range is $36.12 to $61.35.  It almost seems odd that the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) is up 0.6% at $48.38 on the day.

JON C. OGG

American International Group, Inc. (NYSE: AIG) Started as Buy at BofA/ML.
Black Hills Corporation (NYSE: BKH) Raised to Outperform but cut target to $33 at Credit Suisse.
Boston Properties Inc. (NYSE: BXP) Raised to Buy at Argus.
CIGNA Corporation (NYSE: CI) Raised to Outperform as Bull of the Day at Zacks.
CME Group Inc. (NYSE: CME) Raised to Buy at UBS.
FuelCell Energy Inc. (NASDAQ: FCEL) Maintained Buy but cut target to $3.00 at Canaccord Genuity.
James River Coal Co. (NASDAQ: JRCC) Cut to Strong Sell at S&P Equity Research (late-Thursday).
LDK Solar Co., Ltd. (NYSE: LDK) Reiterated Hold at Argus.
Maidenform Brands, Inc. (NYSE: MFB) Reiterated Strong Buy as Value at Zacks.
MEMC Electronic Materials Inc. (NYSE: WFR) Cut to Hold at Stifel Nicolaus.
Micron Technology Inc. (NYSE: MU) Raised to Outperform at Wells Fargo; Reiterated Buy and $14 target at Gleacher & Co.
Oracle Corporation (NASDAQ: ORCL) Reiterated Outperform as #1 pick with $42 target at Credit Suisse.
SciQuest, Inc. (NASDAQ: SQI) Started as Buy at Canaccord Genuity.
SodaStream International Ltd. (NASDAQ: SODA) Reiterated Buy as Aggressive Growth at Zacks.
StanCorp Financial (NYSE: SFG) Reiterated Underperform as Bear of the Day at Zacks.
Under Armour, Inc. (NYSE: UA) Raised to Buy at Stifel Nicolaus.
Zale Corporation (NYSE: ZLC) Cut to Neutral at BofA/ML.
Zipcar, Inc. (NASDAQ: ZIP) Raised to Overweight at JPMorgan.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

When Alpha Natural Resources, Inc. (NYSE: ANR) acquired Massey Energy Co. (NYSE: MEE) at the end of January, Alpha paid about $8.5 billion for a company that had suffered a mine explosion that killed 29 miners and that had just fired its long-time CEO. The Alpha-Massey deal was no bargain, and that might have been what cooled Arch’s desire to jump into the M&A game.

Consolidation in the coal sector has been running pretty hot since the middle of last year. Walter Energy, Inc. (NYSE: WLT) paid about $3.3 billion for Canadian miner Western Coal Corp. in a deal that closed in early March. Mining giant Rio Tinto plc (NYSE: RIO) recently raised its stake in Australian coal miner Riversdale Mining Ltd. (OTC: RFLMF) to 72%.

There is also some speculation that Consol Energy Inc. (NYSE: CNX) could be looking to sell its metallurgical coal reserves in Australia to focus more on natural gas production in the Marcellus shale play. A possible buyer for those assets would be Peabody Energy Corp. (NYSE: BTU), which already has a substantial mining presence in Australia.

International Coal had been mentioned last year as a possible takeover target for Massey. That happened under the leadership of Massey’s former CEO who was struggling to keep the company independent. When he was fired, Massey’s acquisition by Alpha was just a matter of time.

And there sat International Coal, with a market cap then of around $1.7 billion. Paying a 30% premium, Arch could have bought the company then for about $2.2 million. Instead, Arch decided to dither around and pay $3.4 billion now. A fair part of the increase in International Coal’s market cap is the result of speculation for a takeover.

The next speculative targets will probably be Patriot Coal Corp. (NYSE: PCX) and James River Coal Co. (NASDAQ: JRCC). James River just completed its acquisition of privately held International Resource Partners, a West Virgina miner with metallurgical coal assets.

James River also recently failed to complete a tender offer for outstanding 9.375% senior notes due in 2012. The company instead will redeem the notes on June 1, 2011. James River’s market cap is around $800 million.

Patriot Coal’s market cap is about $2.3 billion, and it will certainly get some attention as a takeover. The company was spun-off from Peabody in 2007, and focused on domestic growth while Peabody started looking at international opportunities. Whether or not Peabody will want to bring Patriot back into the fold is questionable.

If Peabody passes on Patriot, perhaps an international buyer will turn up. US companies that are large enough to swallow Patriot are already busy digesting earlier deals. Of course Patriot could merge with another coal company, say James River. But that doesn’t make an awful lot of sense.

In any event, International Coal is up more than 30% today, having posted a new 52-week high of $14.46, just shy of the $14.60/share price offered by Arch. Arch shares are down fractionally. Patriot Coal is up nearly 7%, to $26.94, near the top of its 52-week range of $9.76-$29.20. James River is also up, more than 5%, to $24.50, within its 52-week range of $14.44-$25.12. The Market Vectors Coal ETF (NYSE: KOL) is up about 0.5%, to $51.22, close to its high in a 52-week range of $28.35-$51.87.

Paul Ausick

The US coal sector has experienced its share of ups and downs recently, as the global economy fitfully recovers from the recent recession. In this article, we review how US coal company shares are doing and what may lie ahead for the rest of 2010. Companies in this review include Arch Coal, Inc. (NYSE: ACI), Alpha Natural Resources (NYSE: ANR), Black Hills (NYSE: BKH), Consol Energy (NYSE: CNX), James River Coal (NASDAQ: JRCC), Massey Energy (NYSE: MEE), and Peabody Energy (NYSE: BTU). We’ll also look at the Market Vectors Coal ETF (NYSE: KOL) and a few of its components that aren’t included among the other companies we’re reviewing.  Mine Safety Appliances Co. (NYSE: MSA) even has some skin in the game.

Massey Energy shares have dropped nearly 16% in the two days since the explosion at its West Virginia mine. It’s 52-week trading range is $10.58-$54.80, and it’s trading has stabilized today at right around $46/share. The stock’s 200-day moving average is up about 15.5%, not including today’s drop of more than $2/share so far. Massey’s market cap is about $4.4 billion.

Massey had a lackluster 2009 fourth quarter, but the full-year results were better than 2008. The company projected flat shipments for 2010 but at slightly higher prices than previously estimated. Shipments in 2011 are expected to be about 8% better than 2010 and the average price per ton is also expected to rise. JP Morgan dropped its rating from ‘Overweight’ to ‘Neutral’ in early February, joining most other analysts’ ratings.

Following the disaster in West Virginia, Massey may not even be able to hold on to middling ratings. In its 2009 Form 10-K, the company noted that it does not carry business interruption insurance for the about 1.5 million tons of coal it will not be producing.

Arch Coal shares have jumped about 13% since the beginning of the year. The stock’s 52-week trading range is $12.52-$28.34, and its 200 day moving average is up more than 10%. Arch’s market cap is about $4.14 billion. The company’s shares are up today as traders expect Arch to get a share of Massey’s lost production.

Arch’s fourth quarter 2009 were much like Massey’s, with revenues off slightly and fully diluted EPS also down after excluding one-time items. For 2009, revenues were down more than $400 million and EPS down 89%. The company was looking ahead to economic recovery in 2010 and offered guidance on GAAP EPS in the range of $0.37-$0.86. Following the earnings release, two analysts raised ratings and two lowered them. Sounds about right.

Alpha Natural Resources, with a market cap of $6.52 billion, has been trading in a 52-week range of $15.95-$55.70. The wide span is mostly the result of the closing of its acquisition of Foundation Coal in July 2009. The shares set the 52-week high yesterday, again as a result of the explosion at the Massey mine. The 200-day moving average on the stock is up a bit more than 26%.

Alpha’s fourth quarter and full-year 2009 results were the best in the sector, and its outlook for 2010 was positive both for shipments of thermal and metallurgical coal. Goldman Sachs has Alpha listed on its ‘Conviction Buy List’, and that is probably where it deserves to be.

Peabody Energy is the largest of the US coal miners, with a market cap of $12.67 billion. It’s 52-week trading range is $23.56-$52.14 and the stock’s 200-day moving average is up 6.13%. Shares are trading up more than 2% today, due both to the Massey mine explosion and to the rejection of Peabody’s $3.3 billion bid for Australian coal miner Macarthur.

Fourth quarter 2009 revenues were off about 6.8% sequentially and nearly 18% from the same period in 2008. Shipments were down about 4% sequentially and 11.7% year-over-year. Peabody expects its Australian operations to ship 26-28 million tons of coal to Asian markets this year, up from 23.3 million tons in 2009. Prices are also expected to increase beginning the second quarter of 2010, when annual contracts come up for renewal. Peabody’s ratings lean toward the buy side, and that’s as it should be given its position in Australia.

Consol Energy is the second largest coal company in the US with a market cap of $10.03 billion. The company’s 52-week trading range is $24.01-$58, and its 200-day moving average is down 5.59%. Shares are down more than 1% today, not on any particular news, just general ennui about the company.

Consol issued more than 44 million new shares last week to help fund its acquisition of the Appalachian oil and gas assets of Dominion Resources (NYSE: D), which it will buy for $3.475 billion. The company also fell victim to a lawsuit by shareholders disgruntled at its $363 million offer to buy the assets of CNX Gas Corp. (NYSE: CXG) that Consol does not already own. The suit alleges that the price is too low. Consol has also issued two new debt offerings totalling $2.75 billion at 8% and 8.25% interest. New debt, a shareholder suit, and a share dilution keep the shares tamped down some.

KOL, the Market Vectors Coal ETF, has been trading in a 52-week range of $14.77-$41.55. It’s 200-day moving average is up 13.9%, and shares are trading down slightly today at around $39. The fund’s return on net asset value since the beginning of the year is 4.4%.

Three Chinese coal companies account for about 20% of KOL’s assets. China Coal Energy, China Shenhua Energy, and Yanzhou Coal Mining (YZC) make up 7.73%, 7.67%, and 4.87% respectively of the fund. The largest single holding is Alpha Natural Resources, at 8.28%. Massey Energy is not among the fund’s top 10 holdings.

Mine Safety Appliances Co. (NYSE: MSA) makes health and safety products such as gas masks and detection systems. The company’s 52-week trading range is $21.08-$29.60, and it is currently trading up less than 1% on the day, at $28.66. Shares gained about 5% on yesterday’s opening, but have since given most of that back.  This may have been a ‘mining safety’ play before but it is diversified now.

The last mining disaster in the US occurred in 2007 at a coal mine in Utah that killed six miners and three rescue workers. Since 2000, 39 Americans have died in US mines. That is too many, to be sure, but in the same period a staggering total of 51,266 Chinese have been killed in coal mines. In many ways, the cost of coal is always too high.

PAUL AUSICK

Just over a month ago, we noted the declines in coal stocks, and the situation has not improved. The biggest loser since then has been Massey (NYSE:MEE), down 40%, followed by Foundation Coal (NYSE:FCL), off 37%. Arch Coal (NYSE:ACI), Peabody (NYSE:BTU), James River (NASDAQ:JRCC), and CONSOL are down 22%-28%.

One could argue that coal stocks tracked crude oil prices up, and thendown. And again, like crude, coal stocks got a bailout bump early thisweek. But that didn’t last, and it’s not likely to come back.  Now, thehopes are for "value calls" from analysts and investors.

Coal prices have flattened. According the US Energy Information Agency,Central Appalachian coal has remained at $140/ton since August 29th.Illinois Basin coal has dropped from $93/ton to $84/ton, Powder RiverBasin and Uinta Basin coal are essentially flat at a current price of$11.25/ton and $61.00, respectively. Prices will probably move up aswinter approaches, but recessionary worries and a slowing economy won’thelp bolster prices. Finally, operating expenses for all thesecompanies are sure to increase unless the miners reduce production. Andif they reduce production, well, there go profits.

CONSOL’s news has caused the company’s stock to drop by more than$4/share (about 8%)  in early trading. All the other mining stocks arealso down, with James River down the most (about $3/share, or 9%) onits announcement of its intention to sell 1.5 million new shares ofstock. There’s no good news coming from the mines today.

Paul Ausick
September 24, 2008

• Angiotech Pharmaceuticals (NASDAQ: ANPI) raised to Outperform at RBC Capital Markets.
• BP plc (NYSE: BP) raised to Outperform at Credit Suisse.
• CBS (NYSE: CBS) downgraded to Market Perform at Wachovia; Raised to Hold at Citigroup.
• James River Coal (NYSE: JRCC) raised to Buy at UBS.
• MEMC Electronics (NYSE: WFR) downgraded to Neutral at JPMorgan.
• SAVVIS (NASDAQ: SVVS) downgraded to Hold at Jefferies and downgraded to Equal-Weight at Lehman.
• Smith & Nephew (NYSE: SNN) raised to Outperform at Wachovia.
• Sohu.com (NASDAQ: SOHU) downgraded to Perform at Oppenheimer.
• The Knot, Inc. (NASDAQ: KNOT) raised to Outperform at Oppenheimer.
• Under Armour (NYSE: UA) downgraded to Hold at Citigroup.

Jon C. Ogg
April 30, 2008