24/7 Wall St. » MT

Top Analyst Upgrades & Downgrades (NLY, MT, BP, CBOE, DMD, RDY, ING, MS, NOV, OPEN, SOHU, UBS, VSH, YUM)

Administrator — Wed, 08 Feb 2012 13:18:44 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Wednesday morning.

Annaly Capital Management Inc. (NYSE: NLY) Cut to Market Perform at FBR.
ArcelorMittal (NYSE: MT) Cut to Sell at S&P Capital IQ.
BP PLC (NYSE: BP) Raised Estimates by UBS; Cut to Hold at Soc-Gen.
CBOE Holdings, Inc. (NASDAQ: CBOE) Cut to Underperform at KBW.
Demand Media Inc. (NYSE: DMD) Cut to Underweight at Morgan Stanley.
Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) Cut to Neutral at Credit Suisse.
ING Group, N.V. (NYSE: ING) Cut to Neutral at Goldman Sachs.
Morgan Stanley (NYSE: MS) Cut to Hold at Collins Stewart.
National Oilwell Varco Inc. (NYSE: NOV) raised target to $96 at Argus.
OpenTable Inc. (NASDAQ: OPEN) Cut to Perform at Oppenheimer; Cut to Neutral at Credit Suisse; Raised to Overweight at Piper Jaffray.
Sohu.com Inc. (NASDAQ: SOHU) lowered targets by Credit Suisse and Nomura.
UBS AG (NYSE: UBS) Cut to Sell at Deutsche Bank.
Vishay Intertechnology, Inc. (NYSE: VSH) Raised to Overweight at JPMorgan.
Yum! Brands Inc. (NYSE: YUM) Raised to Neutral at Goldman Sachs.

Credit Suisse makes a change to its favorite biotech list.

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JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: BP, CBOE, DMD, ING, MS, MT, NLY, NOV, OPEN, RDY, SOHU, UBS, VSH, YUM

24/7 Wall St. Closing Bell (SIRI, IBM, AZN, URBN, ZOLT, YUM, MT, BP, KO, EMR, LPX, MNI, CSTR, SPF, NSU, BPAX)

Paul Ausick — Tue, 07 Feb 2012 21:06:42 +0000

US equity markets opened lower this morning, but after the first hour or so of trading, the three major indexes moved to positive territory where they remained for the rest of the day. There was talk that a deal was forthcoming on the Greek debt swap deal, but that did not materialize. Maybe tomorrow? Fed Chairman Ben Bernanke didn’t have anything new to say to the US Senate committee this morning, and today’s earnings reports didn’t impress traders much either. A late day report on a big jump in December levels of consumer credit has given the market a small jolt in the last hour of trading. Crude oil is up today, with WTI crude up sharply by 1.82% at $98.67/barrel and Brent crude up 0.23% at $116.20/barrel. Gold closed up 1.4% at $1,748.40/ounce.

The unofficial closing bells put the DJIA up more than 33 points to 12,878.43 (0.26%), the NASDAQ rose more than 2 points (0.07%) to 2,904.08, and the S&P 500 rose 0.20% or nearly 3 points to 1,347.05.

There were several analyst upgrades and downgrades today, including Sirius XM Radio Inc. (NASDAQ: SIRI) started as ‘underweight’ at Barclays; IBM Corp. (NYSE: IBM) started as ‘buy’ with a $230 target price at Sterne Agee (our coverage here); AstraZeneca (NYSE: AZN) cut to ‘underperform’ at BofA/ML; Urban Outfitters Inc. (NASDAQ: URBN) cut to ‘sell’ at Brean Murray; and Zoltek Cos. Inc. (NASDAQ: ZOLT) cut to ‘underperform’ at Needham (our coverage here).

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Yum! Brands Inc. (NYSE: YUM) is up 2.67% at $64.88 after posting a new 52-week high of $65.79 earlier today; ArcelorMittal AS (NYSE: MT) is up 3.5% at $22.19; BP plc (NYSE: BP) is down -0.41% at $46.68; Coca-Cola Co. (NYSE: KO) is up 1% at $68.71 (our coverage here); Emerson Electric Co. (NYSE: EMR) is down -2.6% at $51.99; and Louisiana-Pacific Corp. (NYSE: LPX) is down -6.5% at $8.31 (our coverage here).

Our preview of tomorrow’s earnings releases is here.

Other standouts from today include the following stocks:

The McClatchy Co. (NYSE: MNI) is up 21% at $2.71. The newspaper company reported stronger-than-expected earnings today on cost-cutting.

Coinstar Inc. (NASDAQ: CSTR) is up 16.5% at $58.90 after posting a new 52-week high of $60.81 earlier today. The video rental company will join with Verizon Communications Inc. (NYSE: VZ) to offer a streaming video service to compete with Netflix Inc. (NASDAQ: NFLX) and others. More coverage here and here.

Standard Pacific Corp. (NYSE: SPF) is up 15.8% at $4.69 after posting a new 52-week high of $4.85 earlier today. The homebuilder posted good earnings today and reported that orders are up 8% in January.

Nevsun Resources Ltd. (AMEX: NSU) is down more than -30% at $4.43. The junior gold miner issued a preliminary 2012 outlook that included a sharp drop in production and in its reserves estimates.

BioSante Pharmaceuticals Inc. (NASDAQ: BPAX) is down more than -18% at $0.86. The company is the target of a new lawsuit charging it with misrepresentation. We have more coverage of BioSante here.

Stay tuned for Wednesday. San Francisco Federal Reserve president John Williams is giving a speech. We have noted the following events on the schedule (all times Eastern):

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

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: AZN, BP, BPAX, CSTR, EMR, IBM, KO, LPX, MNI, MT, NSU, SIRI, SPF, URBN, YUM, ZOLT

Top Analyst Upgrades & Downgrades (ADTN, AAP, APD, MT, ADP, BKU, BA, CATM, CSH, CVX, C, HGSI, LAMR, MA, RSH, SMG, UBS, VE, V, WFT, BRCM)

Administrator — Thu, 19 Jan 2012 13:14:47 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Thursday morning.

ADTRAN, Inc. (NASDAQ: ADTN) Cut to Hold at Needham Research.
Advance Auto Parts (NYSE: AAP) Raised to Outperform at Credit Suisse.
Air Products and Chemical, Inc. (NYSE: APD) Cut to Neutral at JPMorgan.
Arcelor Mittal (NYSE: MT) Cut to Neutral at HSBC.
Automatic Data Processing. Inc. (NYSE: ADP) Started as Outperform at Credit Suisse.
BankUnited, Inc. (NYSE: BKU) Cut to Neutral at BofA/ML.
Boeing Co. (NYSE: BA) Cut to Sell at Societe Generale.
Cardtronics, Inc. (NASDAQ: CATM) Started as Outperform at Credit Suisse.
Cash America International (NYSE: CSH) Raised to Buy at Sterne Agee.
Chevron Corporation (NYSE: CVX) maintained Buy with $130 target but cut estimates at Argus.
Citigroup, Inc. (NYSE: C) Maintained Sell at Argus.
Human Genome Sciences Inc. (NASDAQ: HGSI) Started as Buy with $14 price target at Maxim.
Lamar Advertising Co. (NASDAQ: LAMR) maintained as Outperform and named as the Bull of the Day at Zacks.
MasterCard Inc. (NYSE: MA) Started as Outperform at Credit Suisse.
RadioShack Corporation (NYSE: RSH) Cut to Underperform at Credit Suisse.
Scotts Miracle-Gro (NYSE: SMG) Cut to Underperform at BMO Capital.
UBS AG (NYSE: UBS) Raised to Overweight at Morgan Stanley.
Veolia Environnement (NYSE: VE) Cut to Neutral at HSBC.
Visa, Inc. (NYSE: V) Started as Outperform at Credit Suisse.
Weatherford International Inc. (NYSE: WFT) named as value stock of the day at Zacks.

Read Also: Jim Cramer touts Broadcom Corporation (NASDAQ: BRCM) as a cheap catch-up semiconductor stock. This creates a chart versus fundamental event in price.

JON C. OGG

Filed under: Analyst Calls Tagged: AAP, ADP,, ADTN, APD, BA, BKU, BRCM, C, CATM, CSH, CVX, HGSI, LAMR, MA, MT, RSH, SMG, UBS, V, VE, WFT

Weak Coal Demand Driving Fear (PCX, ANR, JRCC, MT, X, AKS)

Paul Ausick — Fri, 13 Jan 2012 16:23:08 +0000

US coal miner Patriot Coal Corp. (NYSE: PCX) said this morning that it was closing three of its contractor-operated coal mines and two production units in West Virginia “in response to weaker market demand for metallurgical coal.” The announcement has pushed shares down about -10%. Met coal miners Alpha Natural Resources Inc. (NYSE: ANR) and James River Coal Corp. (NASDAQ: JRCC) are also getting hit, as are steel makers Arcelor Mittal (NYSE: MT), US Steel Corp. (NYSE: X), and AK Steel Holding Corp. (NYSE: AKS), which use metallurgical coal to make steel.

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

Filed under: China, Earnings Warning, International Markets, Metals Tagged: AKS, ANR, JRCC, MT, PCX, X

Top Analyst Upgrades & Downgrades (MT, AVNR, CTRN, ETH,INTC, IGT, KALU, LVS, MA, MGM, MNTA, NOR, SFD, SO, SE, URBN, V, WYNN)

Administrator — Tue, 13 Dec 2011 13:35:40 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.

Arcelor Mittal (NYSE: MT) Started as Equal Weight at Barclays.
Avanir Pharmaceuticals, Inc. (NASDAQ: AVNR) Reiterate as “Buy” with a $6 price target by Canaccord Genuity.
Citi Trends, Inc. (NASDAQ: CTRN) Maintained Underperform as Bear of the Day at Zacks.
Ethan Allen Interiors Inc. (NYSE: ETH) Started as Hold at Argus.
Intel Corporation (NASDAQ: INTC) Maintained Outperform but cut estimates at Credit Suisse; maintained Hold with $24 price target objective at Canaccord Genuity.
International Game Technology (NYSE: IGT) resumed with “Outperform” rating at Wells Fargo.
Kaiser Aluminum Corporation (NASDAQ: KALU) Started as Buy at BofA/Merrill Lynch.
Las Vegas Sands Corporation (NYSE: LVS) resumed with “Outperform” rating at Wells Fargo.
Mastercard Incorporated (NYSE: MA) Started as Buy at Nomura.
MGM Resorts International (NYSE: MGM) resumed with “Outperform” rating at Wells Fargo.
Momenta Pharmaceuticals Inc. (NASDAQ: MNTA) reiterate as Buy with a $23 price target objective by Canaccord Genuity.
Noranda Aluminum Holding Corp. (NYSE: NOR) Started as Buy at BofA/Merrill Lynch.
Smithfield Foods Inc. (NYSE: SFD) named as Value stock of the day at Zacks Investment Research.
Southern Co. (NYSE: SO) Cut to Hold from Buy for short-term coverage but maintained a Buy for long-term at Argus.
Spectra Energy Corporation (NYSE: SE) Maintained Outperform as Bull of the Day at Zacks Investment Research.
Urban Outfitters Inc. (NASDAQ: URBN) Maintained Neutral and lowered estimates at Credit Suisse; Maintained Underperform with $17 price target objective by Jefferies.
Visa, Inc. (NYSE: V) Started as Buy at Nomura.
Wynn Resorts Ltd. (NASDAQ: WYNN) resumed with “Market Perform” at Wells Fargo.

JON C. OGG

Filed under: Analyst Calls Tagged: AVNR, CTRN, ETH, IGT, INTC, KALU, LVS, MA, MGM, MNTA, MT, NOR, SE, SFD, SO, URBN, V, WYNN

European ADRs Surging on Global Central Bank Action (ALU, MT, BHP, STD, IRE, CS, UBS, DB, FTE, PHG, ERIC, NOK, NBG, SI, TI)

Administrator — Wed, 30 Nov 2011 14:03:50 +0000

The action out of China’s virtual easing by lowering reserve requirements was already a boost to global markets, but the coordinated central bank efforts of the U.S., Canada, Europe, Switzerland, and the U.K. to preserve global liquidity is creating a boom for stocks today at the expense of the U.S. dollar.

Alcatel-Lucent (NYSE: ALU) is up only 1.25% at $1.60 and shares are flat in local trading in Paris. Arcelor Mittal (NYSE: MT) is up 10% at $18.26 and BHP Billiton Ltd. (NYSE: BHP) is up 6.5% at $74.21.

Banco Santander, S.A. (NYSE: STD) is up 5.6% at $7.56 and the stock is up 4% in local trading in Madrid. The Bank of Ireland (NYSE: IRE) is now up 8.6% at $4.92 and shares are up 7% in local trading in Dublin. National Bank of Greece SA (NYSE: NBG) is up 4.9% at $2.55 in New York but shares are up almost 3% in local trading in Athens.

Credit Suisse Group (NYSE: CS) is up 7% at $24.03 and UBS AG (NYSE: UBS) is up 6.1% at $12.18. Deutsche Bank AG (NYSE: DB) is up 7.9% at $38.36 and shares are up 6.6% in local trading in Frankfurt.

France Telecom (NYSE: FTE) is up 4.3% at $17.01 and shares are up 3.4% in local trading in Paris. Koninklijke Philips Electronics NV (NYSE: PHG) is up 4.6% at $20.00 in New York trading. LM Ericsson Telephone Co. (NASDAQ: ERIC) is up 5.5% at $10.37; Nokia Corporation (NYSE: NOK) is up 4.2% at $5.73. Funny, Nokia’s problems are not really tied to “liquidity” issues or other uncertainties. Siemens AG (NYSE: SI) is up 5.9% at $101.54 in New York and shares are up 4.1% in local trading in Frankfurt.

Telecom Italia SpA (NYSE: TI) is up 5.6% at $11.32 in New York and shares are up 4% in local trading in Milan.

JON C. OGG

Filed under: ADR, International Markets, Pre-Market Activity, Trading Alert Tagged: ALU, BHP, CS, DB, ERIC, FTE, IRE, MT, NBG, NOK, PHG, SI, STD, TI, UBS

European ADRs Dragging Down U.S. Trading (ALU, MT, BHP, STD, IRE, CS, UBS, DB, FTE, PHG, ERIC, NOK, NBG, SI, TI)

Administrator — Tue, 15 Nov 2011 12:44:11 +0000

The Eurozone growth rate of 0.2% in the third quarter may have met expectations but this is just one more example that growth is so low already that getting out of the debt hole is going to be no easy task. As a result, we have another day of Euro-led selling and almost every major European name that has a New York ADR tied to its is trading lower.

Alcatel-Lucent (NYSE: ALU) is down another 2.5% at $1.92 and shares are down 2.6% in local trading in Paris.

Arcelor Mittal (NYSE: MT) is down 3.3% at $18.36 and BHP Billiton Ltd. (NYSE: BHP) is down 1.5% at $74.85.

Banco Santander, S.A. (NYSE: STD) is down almost 2% at $7.47 and the stock is down 2% in local trading in Madrid.

The Bank of Ireland (NYSE: IRE) is down 2.1% at $4.70 and shares are down 2.3% in local trading in Dublin.

Credit Suisse Group (NYSE: CS) is down 3.6% at $23.32 and UBS AG (NYSE: UBS) is down over 2.5% at $11.60.

Deutsche Bank AG (NYSE: DB) is down 2.2% at $37.68 and shares are down 2.6% in Frankfurt.

France Telecom (NYSE: FTE) has not traded in New York but shares are indicated under $17.00 after a $17.10 close on Monday; shares are down 1% in Paris.

Koninklijke Philips Electronics NV (NYSE: PHG) is down 3.1% at $18.86 in New York trading.

LM Ericsson Telephone Co. (NASDAQ: ERIC) is down 1.8% at $9.99; Nokia Corporation (NYSE: NOK) is indicated down almost 2% at $6.42.

National Bank of Greece SA (NYSE: NBG) is down 5.5% at $0.52 in New York but shares are down 8.5% in local trading in Athens.

Siemens AG (NYSE: SI) is down 1.2% in New York and shares are down 1.7% in local trading in Frankfurt.

Telecom Italia SpA (NYSE: TI) is down almost 3% at $11.55 in New York and shares are down almost 3.1% in local trading in Milan.

JON C. OGG

Filed under: ADR, International Markets, Pre-Market Activity, Trading Alert Tagged: ALU, BHP, CS, DB, ERIC, FTE, IRE, MT, NBG, NOK, PHG, SI, STD, TI, UBS

European ADRs Follow Italy Much Lower, Wrecking U.S. Market Gains (E, LUX, TI, ALU, MT, BHP, STD, IRE, CS, UBS, DB, FTE, PHG, ERIC, NOK, NBG, SI, EWI)

Administrator — Wed, 09 Nov 2011 12:32:30 +0000

Well, it used to be Greece taking us down daily, but now it is the much larger concern of Italy. The markets were supposed to be cheering that Silvio Berlusconi was going to step down but then suddenly the fears of who would or could replace him and the uncertainty have set in. Now Italy’s ten-year yield is not just above 5% and 6%, but above 7%. Unlike Greece just being a flea on a dog, Italy is even larger than a dog’s tail and it is frankly too big to just get a bailout.

Eni SpA (NYSE: E) is down over 4% around $42.30 and shares are down 3% in Milan. Luxottica Group SpA (NYSE: LUX) has not traded and we do not yet have Ney Work indications, but shares were down 3.1% in Milan. Telecom Italia SpA (NYSE: TI) is indicated down around 7% in New York at $11.30 but shares are down 4.5% in local trading in Milan.

Elsewhere in Europe….

Alcatel-Lucent (NYSE: ALU) is down around $1.98 (ouch, 52-week low) after a $2.16 close in New York, and shares are down almost 4% in local trading in Paris.

Arcelor Mittal (NYSE: MT) is down over 8% at $19.03 and BHP Billiton Ltd. (NYSE: BHP) is down 4.5% at $76.47 in New York trading in the early pre-markets.

Banco Santander, S.A. (NYSE: STD) is down 7% at $7.50 in active early New York trading but the stock is down more than 3% in local trading in Madrid.

The Bank of Ireland (NYSE: IRE) is down 1.4% at $5.17 in New York and shares are down 2.2% in local trading in Dublin.

Credit Suisse Group (NYSE: CS) is down 7.1% at $24.77 and UBS AG (NYSE: UBS) is down 6.1% at $11.97 in early New York pre-market trading.

Deutsche Bank AG (NYSE: DB) is down over 9% at $36.80 in New York and shares are down about 5% in Frankfurt.

France Telecom (NYSE: FTE) has not traded in New York yet but its shares are down 2% in local trading in Paris.

Koninklijke Philips Electronics NV (NYSE: PHG) is indicated down around $19.65 after a $20.86 close in New York for a loss of close to 6%.

LM Ericsson Telephone Co. (NASDAQ: ERIC) is indicated down 5% around $10.15; Nokia Corporation (NYSE: NOK) is down 4.7% at $6.50.

National Bank of Greece SA (NYSE: NBG) is indicated flat to down a couple cents after a $0.59 close in New York but shares are down 4.1% in local trading in Athens.

Siemens AG (NYSE: SI) is down 4.5% at $98.56 in New York trading and shares are down 1.6% in local trading in Frankfurt.

iShares MSCI Italy Index (NYSE: EWI) is trading down 5.2% at $12.87.

Another rough day is being brought on by the woes of the nanny and endless welfare nations in Europe. S&P futures are down over 2% with well over two hours until the market opens.

JON C. OGG

Filed under: ADR, Economy, International Markets, Pre-Market Activity, Trading Alert Tagged: ALU, BHP, CS, DB, E, ERIC, EWI, FTE, IRE, LUX, MT, NBG, NOK, PHG, SI, STD, TI, UBS

European ADRs Leading The Charge Higher (ALU, MT, BHP, STD, IRE, CS, UBS, DB, FTE, PHG, ERIC, NOK, NBG, SI, TI, EWI, EWQ, EWG)

Administrator — Thu, 27 Oct 2011 12:01:02 +0000

Greece and the rest of the PIIGS were hurting us for so long that it seems hard to believe that the Europeans are setting a 50% haircut for the Greek sovereign debt and that they have agreed to a $1.4 trillion (1 trillion Euro) Euro-zone rescue package. The news is causing a major rally in the stock markets with the German DAX up over 4% and the French CAC up 5%. The FTSE in England is up 2.6% and the Greek stock market (there actually is one) is up over 6.5%. European ADRs are leading the markets higher this Thursday… Much higher.

Alcatel-Lucent (NYSE: ALU) is up over 2.5% at $2.80 and shares are up 5.1% in local trading in Paris.

Arcelor Mittal (NYSE: MT) is up almost 7% at $20.95 and BHP Billiton Ltd. (NYSE: BHP) is up 5.1% at $82.07.

Banco Santander, S.A. (NYSE: STD) is up 5.6% at $8.87 and the stock was up 6.1% in local trading in Madrid.

The Bank of Ireland (NYSE: IRE) is up 6.2% at $6.17 and shares are up 7% in local trading in Dublin.

Credit Suisse Group (NYSE: CS) is flying with shares up 9.6% at $30.67 and UBS AG (NYSE: UBS) is up 7.8% at $13.65.

Deutsche Bank AG (NYSE: DB) is up a whopping 14% at $46.00 and shares are up 15% in Frankfurt.

France Telecom (NYSE: FTE) is up 1.5% at $18.58 in New York and shares are up 1.5% in Paris as well.

Koninklijke Philips Electronics NV (NYSE: PHG) is up about 6% at $22.23.

LM Ericsson Telephone Co. (NASDAQ: ERIC) is up 5.6% at $10.83; Nokia Corporation (NYSE: NOK) is up 5.3% at $7.13.

National Bank of Greece SA (NYSE: NBG) is up 15.6% at $0.545 in New York but shares are up 12.2% in local trading in Athens.

Siemens AG (NYSE: SI) is up 3.1% at $108.58 in New York and shares are up 3% in local trading in Frankfurt.

Telecom Italia SpA (NYSE: TI) has not yet traded in New York but shares have a pre-trade indication of $13.20 versus a $12.73 close in New York; shares are up 4% in local trading in Milan.

iShares MSCI Italy Index (NYSE: EWI) is up 1.8% at $14.05. iShares MSCI France Index (NYSE: EWQ) is up 4.4% at $22.45 and iShares MSCI Germany Index (NYSE: EWG) is up 4.4% at $22.12.

JON C. OGG

Filed under: ADR, International Markets, Pre-Market Activity, Trading Alert Tagged: ALU, BHP, CS, DB, ERIC, EWG, EWI, EWQ, FTE, IRE, MT, NBG, NOK, PHG, SI, STD, TI, UBS

What Recession? Coal Acquisitions Keep on Coming (BTU, MT, MACDF, ACI, WLT, RIO, ANR, AAUKY, BHP, VALE, PCX, KOL)

Paul Ausick — Fri, 21 Oct 2011 13:55:58 +0000

While Peabody Energy Corp. (NYSE: BTU) and ArcelorMittal (NYSE: MT) haven’t been pursuing Australia’s Macarthur Coal Ltd. (OTC: MACDF) for more than a few months, the deal never really looked like it would get done. The original offer of $3 billion never got any traction with Macarthur and the Peabody-Arcelor bid was eventually raised to $5 billion. Macarthur’s largest shareholder, China’s Citic Resources, has blessed the new price and the deal is all but done. Citic owns 25.2% of Macarthur and Peabody-Arcelor own another 24%, virtually guaranteeing the acquisition.Macarthur’s appeal comes from its large metallurgical coal resources. Met (or coking) coal commands a premium price in the market and is a necessity for steel-making. Earlier this year, Arch Coal Inc. (NYSE: ACI) acquired International Coal Group, another met coal producer, for $3.4 billion. Walter Energy, Inc. (NYSE: WLT) paid about $3.3 billion for Canadian miner Western Coal Corp. in a deal that closed in early March. And mining giant Rio Tinto plc (NYSE: RIO) completed its acquisition of Australian met coal miner Riversdale in June. The largest deal was the acquisition of Massey Energy and its large met coal assets by Alpha Natural Resources, Inc. (NYSE: ANR) for nearly $9 billion.

Met coal currently commands a contract price of about $285/metric ton. The spot price for Australian met coal is around $250/metric ton, a -20% drop in just three months. That indicates that the contract price will fall as well, and probably below the spot price. Platt’s has quoted a broker who has projected prices of $235/metric ton in the first quarter of 2012, falling to $205/metric ton by the end of the year.

The lower pricing is the result of an anticipated slowdown in the global economy, particularly in China which has experienced a construction boom in the past few years. But tighter government restrictions on lending and an over-supply of vacant buildings have resulted in fewer construction projects.

Still, there remains speculation that other coal companies may be takeover targets. We noted a rumor in early September that British miner Anglo American PLC (OTC: AAUKY) may be preparing a bid for Walter Energy. Last week, BHP Billiton plc (NYSE: BHP) was said to be considering a $6 billion offer for Walter Energy, with Brazilian giant Vale SA (NYSE: VALE) also included in the mix.

Like many commodities stocks, Walter Energy’s share price plunge in early August, and posted a 52-week low of $57.62. Shares have recovered to over $75, but that’s still about 50% off the stock’s 52-week high. If a takeover offer is coming, now is probably a good time.

US miner Patriot Coal Corp. (NYSE: PCX) has been boosting its production of met coal, and the company has said it sees strong demand for the steel-making coal continuing from Brazil and India. Patriot’s share price is about 67% below its 52-week high, making it another possible takeover target now that it’s market cap has fallen below $1 billion.

Peabody’s shares were up more than 3% at this morning’s opening, at $39.39, in a 52-week range of $30.60-$73.95. ArcelorMittal’s shares were also up more than 3%, at $18.72, in a 52-week range of $14.77-$38.88. The Market Vectors Coal ETF (NYSE: KOL) is unchanged, at $35.14, in a 52-week range of $27.42-$51.87.

The elephant in the room that no one wants to acknowledge is that if the stronger coal players are using the recent weakness to acquire the weaker players, perhaps these companies are positioning themselves better for the next decade and beyond. Coal demand is a often considered as a leading indicator because it is still used as a key measurement for power consumption and for building infrastructure equipment and structures. As with many businesses in and around commodities, getting better scale and better geography can incrementally lower costs and that drives higher margins. Coal players seem to be positioning themselves for far beyond the next few years.

Paul Ausick

Filed under: Commodities, Mergers and Buy Outs Tagged: AAUKY, ACI, ANR, BHP, BTU, KOL, MACDF, MT, PCX, RIO, VALE, WLT